New Delhi, July 6: The Narendra Modi-government is looking to raise around Rs 1 lakh crore from divestment in state-run units and spectrum auction to part fund its maiden budget. The government has little leeway to raise tax even as higher crude price threatens to jack up the subsidy bill, forcing the finance and telecom ministries to look at ambitious targets from these two avenues.
Besides blue-chip giants such as Coal India and Steel Authority of India, the selloff list for the current year includes NHPC, Rural Electrification Corp and Power Finance Corporation.
The department of disinvestment, the finance ministry arm tasked with selloffs, is also exploring the possibility of selling the residual shares in Hindustan Zinc and Bharat Aluminium Corporation. The previous NDA government had handed over the control of these two entities to Anil Aggarwal-owned Vedanta group.
A new Sebi rule which says the public should hold at least 25 per cent in listed PSUs, including state-run banks, will also see a large number of stocks on the block.
The department of disinvestment has drawn up a timetable to bring shares worth around Rs 70,000 crore to the market in the next three years, with a sizeable chunk slated for the current financial year. At least 23 state companies that are part of the BSE PSU index would need to sell their shares to comply with the Sebi norm.
The target in the interim budget to raise Rs 36,925 crore in 2014-15 is likely to be raised by 40 per cent to around Rs 51,965 crore. This may even be breached in a booming market, said officials.
A PSU exchange-traded fund set up by former finance minister P. Chidambaram is likely to be revamped to allow it to pick up shares.
The fund will act as a safety net in case the boom in the stock market fizzles out, besides giving retail investors a safe instrument to park their funds.
The telecom department has drawn a road map for the next two to three years to auction airwaves in the 700MHz, 800MHz, 900MHz and 1,800MHz bands.
The auctions are expected to fetch the government around 35 per cent more at Rs 52,587 crore compared with the Rs 38,954-crore target set in the interim budget for 2014-15.
At least 184MHz of air waves in the 900MHz band spread over 18 circles and 104MHz in the 1,800MHz band covering around 17 circles will be up for auction this year.
In December 2015, four licences of Bharti Airtel, seven each of Idea Cellular and Reliance Telecom and six of Vodafone will be up for renewal. The DoT had put 385 MHz of airwaves under 1,800MHz band and 46MHz under 900MHz up for auction in February.
Besides, under pressure from the Russian government, which has a stake in Sistema, the government is likely to sell spectrum in the 800MHz band.
Sistema Shyam Teleservices Ltd (SSTL) was the lone bidder at the CDMA spectrum sale held in March last year. It won back spectrum to operate in eight circles for Rs 3,639 crore. The Supreme Court had cancelled its licences in the eight circles, alleging irregularity.
The government has also indicated that it will auction the extremely efficient 700MHz airwaves. Around 90MHz of this coveted spectrum, which can be used for 4G services, can be put up for auction if an in-principle decision on the issue can be taken, said officials.