Buoyed by the prospect of a strategic sale in BPCL and Air India, Budget 2020-21 could set an ambitious stake sale target even though the Modi government may fail to meet the current fiscal’s Rs 1.05-lakh-crore selloff mark.
Finance ministry officials said it is now certain that the strategic sale of BPCL, Air India, Container Corporation of India Ltd (Concor) and Shipping Corporation of India (SCI) would be held in the next fiscal.
“This would give the leverage to go for ambitious numbers as they would garner enough money for the government next fiscal. The exact target would only be known on February 1.. it would certainly be ambitious numbers,” sources said.
They indicated that the strategic sale of these state- owned firms would at least yield Rs 1 lakh crore, and there would be follow-on public offers by PSUs, which could result in the target being set anywhere between Rs 1.30 lakh crore and Rs 1.50 lakh crore.
While the government plans to privatise Air India by selling its 100 per cent ownership in the airline, it will divest its entire 53.29 per cent stake in BPCL and 30.8 per cent of its current 54.8 per cent stake in Concor and 63.75 per cent stake in SCI.
Madan Sabnavis, chief economist of Care Rating, however, said: “The divestment target for 2020-21 is likely to be Rs 1 lakh crore, Rs 0.1 lakh crore lower than the budgeted target for 2019-20 as the timelines for the divestment are yet to be specified.”
“The government is likely to bring down its stake in certain public sector undertakings to below 51 per cent.
“With the BPCL divestment not going through in 2019-20, it would be the major sale in 2020-21 along with Air India. Additionally, they may announce policies/measures for the monetisation of assets of public sector entities. Such a measure would mean creating a framework for asset monetisation, which involves the structures to be followed such as auctioning or any other kind of bidding process,” he said.
For the current fiscal, the government has garnered Rs 18,095 crore through stake sales in 2019-20.
Sources said that the government could take the offer-for-sale route in half-a-dozen public sector enterprises (CPSEs), including Coal India and Cochin Shipyard, to make up for the shortfall in tax receipts this fiscal. The other units whose stakes could be sold include Hindustan Aeronautics, Bharat Dynamics, Mishra Dhatu Nigam and Garden Reach & Shipbuilder Engineers.
Consolidation in the power sector would be put on the fast lane too. The cabinet had approved the sale of its entire stake in Tehri Hydro Development Corp (74.23 per cent stake) and North Eastern Electric Power Corp (100 per cent stake) to NTPC.
Sources said the stake sale through the OFS route and the power sector consolidation would help the government garner Rs 40,000-45,000 crore, which would still leave a significant gap in the target.
