The continuing delay in the Centre’s ₹1.75 lakh crore disinvestment and stake sale plan is testing the patience of those interested in buying the assets. The disinvestment process started nearly two years back in many cases, but has yet to reach anywhere. Some fear it may not be completed even in this fiscal.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved disinvestment of national carrier Air India in February 2019. In November 2019, CCEA approved strategic disinvestment in five major Central Public Sector Enterprises (CPSEs) including Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India Ltd (SCI) and Container Corporation of India Ltd (CONCOR).

Officials claim the pandemic delayed the process, but business houses which expressed interests in buying the assets, say the disinvestment plan got caught in red tape and systemic apathy. "The companies which expressed interest for BPCL and Air India haven't received any responses on the assets and liabilities fronts yet," said an executive.

Though government officials say that the process for many companies will be completed in this financial year, company officials are not willing to believe it. According to economists, the delay will impact the country's fiscal deficit and the government will have to either slowdown spending in the second half of 2021-22 or increase borrowing for meeting the budgeted expenditure.

In the current financial year, the government expects the fiscal deficit (the gap between expenditure and revenue) at 6.8 per cent of GDP or ₹15,06,812 crore. The fiscal deficit for 2020-21 was 9.3 per cent. At the end of June, the fiscal deficit was ₹2,74,245 crore or 18.2 per cent of the full year's budget estimate, thanks to higher tax and non-tax revenues and non-debt capital receipts.

Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) recently said the government is striving to complete strategic disinvestment of some CPSEs, including Air India and BPCL this fiscal. The initial public offer of LIC and stake sale in IDBI Bank are progressing despite delays, he said. Even though shortlisted bidders are now doing due diligence for BPCL and Air India, the process could take longer than anticipated earlier, he said.

Anil Agarwal's Vedanta group and private equity giants Apollo Global and I Squared Capital had submitted expression of interest for the controlling stake in BPCL in December 2020.

Recently, Minister of State for Civil Aviation General (retd.) VK Singh told Lok Sabha that the financial bids for Air India are likely to be received by September 15 this year. Tata Sons and SpiceJet's Ajay SIngh had already submitted expression of interest. In 2018, the government had attempted to offload a 76 per cent stake and management control in Air India which has a huge debt of Rs 60,000 crore, but failed to get a single bidder.

Rajiv Kumar, Vice-chairman, NITI Aayog, said a month back that the climate for disinvestment is looking better, pointing out that many of start-ups are lined up. Experts fear the plan will be further impacted if there is a third wave of the pandemic. However, industry sources say the pandemic has nothing to do with disinvestment. The bureaucrats should move their feet rather than blaming the situation, said an industrialist.

Finance Minister Nirmala Sitharaman had said in her Budget speech that a number of transactions –BPCL, Air India, SCI, CONCOR, IDBI Bank, BEML, Pawan Hans, Neelachal Ispat Nigam Limited—would be completed in 2021-22, despite the delay due to the pandemic.

Of the disinvestment target of Rs 1.75 lakh crore for 2021-22, the government has budgeted Rs 1 lakh crore from sale of government stake in LIC and banks. The LIC IPO is expected to be the largest the country has ever seen.

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