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Budget 2018: FinMin could raise disinvestment target to Rs 1 trn

Likelihood of outstripping 2017-18 budgeted estimate of Rs 725 bn seen as key driver; Air India sale to be marquee disinvestment action

Arup Roychoudhury  |  New Delhi 

Arun Jaitley on Budget 2018
While Finance Minister Arun Jaitley may not present an outright populist budget, he is still likely to offer sops and an increase allocation across schemes and public expenditure

Buoyed by the success of this year’s programme, the could set an even higher target of Rs 900 billion-1 trillion (Rs 90,000-1,00,000 crore) for 2018-19. This will encompass the sale of Air India, a number of other privatization initiatives, mergers, initial public offerings, the centre’s two exchange-traded funds, buybacks and offers-for-sale, and even monetization of land assets.

The budgeted estimate for 2017-18 is Rs 725 billion (Rs 72,500 crore), the highest ever for a year so far. With the acquisition of by expected to be completed soon, that target will be easily outstripped. As of January 22, divestment proceeds stood at Rs 555 billion (Rs 55,500 crore). ONGC’s acquisition of HPCL’s 51 per cent stake is valued at Rs 369 billion (Rs 36,900 crore). That would take divestment proceeds to Rs 925 billion (Rs 92,500 crore) for 2017-18.

The upcoming 2018-19 budget, to be presented by Finance Minister Arun Jaitley, while not expected to be outright populist, will still contain sops and see an increase in allocation across schemes and public expenditure. He will require resources, and is expected to be a major one.

While will be the marquee sale, expected to be completed by October 2018, the centre may sell as well, among other loss-making PSUs, Business Standard has learnt. The department of investment and public asset management (DIPAM) has already created a pipeline for potential stake sale through various methods.

2018-19 divestment target may be Rs 900 bln-1 trn, highest ever by some distance
privatization to be marquee action
Privatisation of other also planned, including Pawan Hans
Further PSU mergers on the cards
IPOs, OFSs, buybacks to continue into next fiscal

State-owned construction company NBCC Ltd, which has already bought Ltd this year, may buy other smaller construction and engineering PSUs, sources said. The candidates are Hindustan Prefab, Ltd, NPCC Ltd, and

The centre launched its second PSU ETF, the in November and garneted Rs 145 billion (Rs 14,500 crore). An official said that there is still a massive interest amongst investors, and a second tranche is certain to be launched early next fiscal. There could be further tranches of its first as well.

The pipeline includes a number of pending IPOs as well. The names include defence companies like Hindustan Aeronautics Ltd, Garden Reach Shipbuilders, and Mazagaon Dockyards, railway companies like Ircon, RITES, and IRFC, and three general insurance companies. While a few of these could happen before March 31, most are slated for next year.

Preparations are being carried out for a number of OFSs as well. The plans are for a 10 per cent stake in NHPC, and SAIL, 15 per cent in NLC, five per cent in and three per cent in Indian Oil. Buybacks by are expected to continue next year as well.

First Published: Sat, January 27 2018. 01:17 IST