More CPSE ETFs in the offing in FY18

With overwhelming response on the recent CPSE ETF which managed to garner Rs 6,000 as part of the government's disinvestment program, Indian government plans to launch more such ETFs in the upcoming financial year.

Finance Minister Arun Jaitley, while presenting the Union Budget on Wednesday, said, "Our ETF, comprising shares of ten CPSEs, has received overwhelming response in the recent Further Fund Offering (FFO). We will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18."

Thus far, there have been two tranches of ETFs from the government. The recent one managed by Reliance Nippon Mutual Fund was oversubscribed 2.3 times as it witnessed applications worth over Rs 13,000 crore against the issue size of Rs 6,000 crore.

The government was to offload shares in the underlying 10 companies as part of the 2016-17 disinvestment programme, the target for which was set at Rs 56,500 crore. So far, however, in this financial year, the mobilisation has been a a little less than Rs 30,000 crore.