Why has the government cut its disinvestment targets so sharply for next two years?

The government has tried to deliberately underplay disinvestment as a revenue strategy after the tepid performance of the last two years. For instance, the Union Budget 2022 has projected disinvestment revenues of Rs.78,000 crore for FY22 as against the original target of Rs.175,000 crore. In addition, the disinvestment target for FY23 has been scaled down sharply to more manageable levels of Rs.65,000 crore for the next fiscal year.

Now this also means more things as we understand. Firstly, the target of just Rs.78,000 crore in FY 22 would mean that LIC IPO could be smaller or at a lower valuation. The FY23 divestment target is going to be dominated by BPCL. Other than BPCL, disinvestments would be largely tepid in FY23. On the positive side, this also means less crowding out risk by mega PSU issues. This should leave more space for the private plays and digital plays.