Will Arun Jaitley be able to meet Disinvestment Targets?

One smart reform that has been given a push by Arun Jaitley's third budget is monetising idle assets of the Public Sector Undertakings (PSUs). Mr. Jaitley has set a target of Rs. 56,500 crore through the disinvestment in PSUs during the fiscal year 2016-17.

As per him of the total 56,500 crore, Rs. 36,000 crore is to come from minority stake sale in PSUs. Remaining Rs. 20,500 he says should be realised from the sale in both profit and loss-making PSUs.

Here one needs to know that for the previous year the target set by FM to realise money by selling stake in PSUs was Rs. 69, 500. He could only manage to get half of the sum estimated. During the year 2015-16 government could only realise Rs. 25, 312 crore.

Here one other point that needs to be noted is that this is the sixth consecutive year that government of the day has missed the disinvestment target set in Budget. Volatile market conditions are said to be the reason for the government not able to meet its disinvestment targets.

Last year government was able to sell its share in six PSUs which are:

1. Rural Electrification Corp Rs. 1,608 crore
2. Power Finance Corp Rs. 1,671 crore
3. Dredging Corp of India Ltd Rs. 53.33 crore
4. Indian Oil Corp Rs. 9,369 crore
5. Engineers India ltd Rs. 640 crore
6. NTPC Rs. 5,030 crore

During the budget speech Mr. Jaitley renamed the Department of Disinvestment to Department of Investment and Public Asset Management (DIPAM).

As per the FM NITI Aayog will identify the state-owned companies which would be eligible for strategic sale.

Mr. Jaitley had told during the budget speech that, "We have to leverage the assets of CPSEs for generation of resources for investment in new projects. We will encourage CPSEs to divest individual assets like land, manufacturing unit to release their asset value for making investments in new projects".

He had further added that, "The NITI Aayog will identify the CPSE for strategic sale. We will adopt a comprehensive approach for efficient management of the government investment in CPSEs by addressing issued such as capital restructuring, dividend, bonus shares".

Many see it as continuation or reviving of policy that was followed during Atal Bihari Vajpayee's government. Between 1999 and 2004 the first NDA government had privatised many PSUs including Videsh Sanchar Nigam Ltd (VSNL) Hindustan Zinc (HZL) and others.