Finance Minister Nirmala Sitharaman, in the Interim Budget, announced a significant revision to the divestment targets for the fiscal years 2024 and 2025. The divestment target for FY24 has been scaled down from the previously budgeted Rs 51,000 crore to Rs 30,000 crore, reflecting challenges faced in meeting the initial goal. Furthermore, the divestment target for FY25 has been set at Rs 50,000 crore.
The government’s divestment endeavours have encountered hurdles, with the fifth consecutive year of missing targets. Despite successful privatisations of Air India and Neelachal Ispat Nigam Limited (NINL) in 2022, the overall divestment performance has fallen short. The government has raised a modest Rs 10,051.73 crore in the current fiscal year. The primary contributions came from Central Public Sector Enterprises (CPSEs) IPOs (Initial Public Offering) and OFS’ (Offer For Sale).
Plans hit
The strategic sale plans for entities like Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI), and CONCOR, initially slated around 2019, faced delays due to the COVID-19 pandemic. Analysts suggest that the privatization of these companies may now be deferred until after the upcoming General Elections, scheduled for April-May.
While the government achieved success with the privatization of Air India and NINL in 2022, it has had to adjust its divestment targets in response to changing market conditions. The planned strategic divestment of state-run retailer BPCL was scrapped, and attempts to sell entities like RINL, Vizag Steel, and SAIL’s Salem steel plant faced obstacles.
ETBFSI now has its WhatsApp channel. Join for all the latest updates.
