Meeting the government’s ₹1.05 lakh crore sell-off target

Doubting Thomases who worry about the government’s ability to raise ₹1.05 lakh crore this fiscal (FY20) through disinvestment need not worry. And we are not even talking of a strategic disinvestment in Air India, which seems to find little interest among global players, or in Bharat Petroleum, or Shipping Corporation of India, which have far better prospects.

We are talking of easily doable things like selling stakes in various central public sector enterprises (CPSEs) or even go in for follow-up offers. The easier way for the government to reach the budgeted figure is to reduce its stake in 57 PSEs to 49%, and viola! It can easily raise more ₹1.50 lakh crore, shows data from Prime Database. It also makes eminent sense given that the capital market is touching new highs every day.

The calculations are based on the market capitalisation of these companies as on December 24, 2019, and the government’s stake in these companies as on September 30, 2019—which show the amount that the government can raise by bringing down its equity to 49% through whatever means it deems fit.

Let us take Coal India, whose market cap stands at ₹1.21 lakh crore. It would give the maximum return should the government bring down its 69.26% stake to 49%: ₹22,242 crore. The second would be Oil and Natural Gas Corporation in which the government has a 63% stake. Lower it to 49%, and the government would pocket ₹19,282 crore. Disinvestment in General Insurance Corporation of India (the government’s stake is 85.78%) would yield ₹13,580 crore.

Even loss-making PSEs like Scooters India Ltd can contribute ₹116 crore to the government’s kitty and so can little-known ones such as Bharat Immunologicals and Biologicals Corporation. With a market cap of ₹33.28 crore, it would add ₹2.76 crore to the exchequer.

Capital goods manufacturer Bharat Heavy Electricals, which is facing heavy weather because of the current economic slowdown and increased competition from foreign players, too can add ₹1,801 crore to disinvestment proceeds.

At a time when the government is faced with a severe resource crunch, with goods and service tax collections falling below target, selling stakes in these companies could prove a shot in the arm for the government and help it keep its fiscal deficit in check.