InvestorQ : Will the government be able to achieve its disinvestment target for this fiscal year with just about 3 months to go?
indhumathi Sayani made post

Will the government be able to achieve its disinvestment target for this fiscal year with just about 3 months to go?

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Riya Dwivedi answered.
2 years ago
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The government has set an ambitious target of Rs.105,000 for the full year 2019-20. However, the government looks unlikely to complete the privatization of Air India, Bharat Petroleum and Container Corp Corporation by March 2020. This will leave a shortfall of Rs.40,000-50,000 crore for the year as compared to the Union Budget estimates. Most economists have already hinted at the fiscal deficit getting closer to the 4% mark during the year because the government also needs to push growth as the GDP growth has come down to just about 4.5% in the September quarter.

The government has confirmed that there was substantial interest among the investors for the companies on offer. However, the government now feels that some of the divestment names like Air India may stretch beyond March as they need to finalize the price and also the methodology to monetize its land parcels and other assets. Taking over the debt can be another complex exercise and that is something that the government has been working on.

The government also clarified that in some cases it could trigger an open offer for minority shareholders as per SEBI guidelines. This would be more relevant to listed companies that are proposed to be divested like BPCL and Concor. In the last few days, there has been considerable pressure from international bodies including the IMF on India to set its finances in order. IMF has estimated that India may miss the fiscal deficit target by at least 50 basis points.

The government plans to privatize Air India by selling its 100% ownership. In addition, it will divest its entire 53.29% stake in BPCL. In the case of CONCOR, the government will sell 30.8% stake Concor out of its current 54.8% stake. As of end of December, the government has only managed to collect Rs.17,364 out of its full year ambitious disinvestment target of Rs.105,000 crore for FY20.
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