Divestment of stakes: Govt may lower PSU stake sale target for 2013-14

The government is expected to lower its targeted collection from divestment of stakes in public sector utilities (PSUs) in 2013-14, after struggling to meet the budgeted targets over the previous two financial years.

Accordingly, the Budget estimate for receipts from disinvestment in public sector units is likely to be pegged at about Rs 25,000 crore to Rs 28,000 crore in the next fiscal.

"This would be a fairly reasonable and realistic estimate that can be raised by disinvestment in about 10 public sector units. At least Rs 4,000 crore will also come from the exchange traded fund of PSUs that should be launched over the next few months," a senior government official said.

Receipts from disinvestment are crucial for financing the fiscal deficit which is pegged at 5.3 per cent of the GDP in 2012-13 and is proposed to be lowered to 4.8 per cent in 2013-14. But the target stake sale proceeds, which has been discussed as part of preliminary Budget discussions is significantly lower than what the government hoped to achieve in the past two financial years.

In 2011-12, the finance ministry planned to raise Rs 40,000 crore from disinvestment proceeds but was able to garner only about Rs 14,000 crore. Similarly, in the current fiscal, as against a Budget estimate of Rs 30,000 crore, stake sales are likely to fetch around Rs 24,000 crore.

The department of disinvestment is understood to be working out a list of PSUs that will go for stake sales next fiscal. While approvals for disinvestment in a number of state-owned firms such as MMTC Ltd, HAL and Rashtriya Chemicals and Fertilizers are already in place, the official said possible candidates for stake sales in 2013-14 are likely to include

Engineers India Ltd and RINL Ltd.

"Additionally, there are about a five to six PSUs such as National Fertilizers and Neyveli Lignite that have to increase their public float this fiscal and will tap in the equity markets," the official said.

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