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Disinvestment target at Rs 1.75 lakh crore lower than Rs 2.1 lakh set for the current fiscal year

Nirmala Sitharaman

Finance Minister Nirmala Sitharaman, presenting the Union Budget 2021-22 on Monday, set a lower disinvestment target of Rs 1.75 lakh crore compared to 2.1 lakh crore in 2020-21. The disinvestment exercise will be crucial for the government for garnering revenue in the next financial year amid tight fiscal constraints. The government has proposed to take up two public sector banks along with a general insurance company for disinvestment in the new financial year besides launching the initial public offer (IPO) of the public sector life insurer behemoth Life Insurance Corporation of India. 

Sitharaman added that the proposed strategic sale of BPCL, IDBI Bank, Container Corporation, Shipping Corp, Neelachal Ispat Nigam Ltd, Pawan Hans, Air India, among others, would be completed during the year.

“Other than IDBI Bank, we propose to take up the privatization of two public sector banks and one general insurance company in the year 2021-22,” the finance minister said.

With a view to fast-tracking the critical disinvestment exercise, Niti Aayog is set to chalk out a list of central public sector companies. Sitharaman also said that states will be encouraged to take to disinvestment of their public sector companies for which the Centre will work out an incentive package of central funds for states.

“I propose to use a Special Purpose Vehicle in the form of a company that would carry out this activity. In order to ensure timely completion of closure of sick or loss making CPSEs, we will introduce a revised mechanism that will ensure timely closure of such units,” Sitharaman said.

In the current financial year, the government has managed to garner just over Rs 19,499 crore.

Analysts said that the government must focus on adhering to the set disinvestment targets. "Implementation and adhering to the targets have always remained uncertain. The government must have a mechanism to ensure that the set target is met as it will be crucial to bring down fiscal deficit," an analyst said   

“A consolidated Securities Market Act, domestic gold exchange regulator, LIC IPO, other PSU disinvestments by showing a clear cut forward path has given tremendous boost and strengthened the markets infrastructure framework for capital formation,” Ashishkumar Chauhan, MD & CEO, BSE said in a statement.