Centre's disinvestment receipts in FY25 set to hit an 11-year low

The union government stopped setting specific disinvestment targets beginning in the 2023-24 financial year

The central government’s disinvestment receipts in 2024-25 (FY25) are set to be the lowest since the Narendra Modi government took charge in 2014-15, with the government accruing ₹9,319.05 crore through minority stake sales so far in the current financial year (FY25).

 

In 2023-24 (FY24), the government received ₹16,507.29 crore through disinvestment. With less than a fortnight left, the FY25 receipts will be lower than even 2021-22, when it collected ₹13,534.4 crore.

 

The government stopped setting specific disinvestment targets beginning in FY24.

 

In July, following the presentation of the full Budget for FY25, then-Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey highlighted the government’s shift in focus towards “value creation”. The approach entails optimising the performance of public sector enterprises (PSEs) through measures like enhanced capital expenditure, higher dividends, calibrated market dilution, and privatisation where feasible.

 

The government typically conducts disinvestment through minority stake sales and strategic disinvestments of central PSEs (CPSEs). Strategic disinvestment involves the full or substantial sale of government shareholding in a CPSE along with the transfer of management control.

 

So far in FY25, the government has divested 3.39 per cent of its shares in General Insurance Corporation of India through an offer for sale (OFS), generating ₹2,345.55 crore. In Cochin Shipyard, 4.95 per cent of the government’s shares were sold via OFS, raising ₹2,015.32 crore.

 

A further disinvestment occurred in Hindustan Zinc, where 1.62 per cent of shares were sold through OFS, generating ₹3,449.18 crore. The government has also included ₹1,509 crore in remittances from Specified Undertaking of the Unit Trust of India under its disinvestment receipts in FY25.

 

Moreover, the government agreed to sell 100 per cent of Ferro Scrap Nigam, a fully owned subsidiary of MSTC, to Konoike Transport Co. for an equity value of ₹320 crore. However, the transaction has not been completed yet.

 

According to a government reply in the Lok Sabha in December last year, of the 33 cases being handled by DIPAM, strategic disinvestment transactions have been completed in 10 cases (eight transactions in the CPSE-to-CPSE space, while Air India and Neelachal Ispat Nigam have been privatised); five PSEs are under consideration for closure; one case is held up due to litigation; one case is under the corporate insolvency resolution process in National Company Law Tribunal; and two transactions were found not feasible. Of the remaining 14 transactions, an expression of interest (EoI) has not been issued, or transactions have been called off after the issuance of an EoI in the case of six PSEs, while eight transactions are at various stages of the strategic disinvestment process.