While the pandemic derailed plans, the government needs to meet its targets next year to bridge fiscal deficit
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While announcing the budget last year, Finance Minister Nirmala Sitharaman, set an ambitious target of Rs 2.1 lakh crore from disinvestments, but the pandemic year did not help her case. As per the latest data available from the department of investment and public asset management (DIPAM), the government has managed to raise Rs 19,499 crore during the year in the form of disinvestment receipts.
The total DIPAM receipts stand at Rs 35,094 crore which include earnings from disinvestments, dividend income of Rs 17,136 crore and bond exchange traded fund (ETF) receipts of Rs 10,992 crore.
Over the last three years, the government has heavily depended on buybacks to fill its coffers and meet fiscal deficit targets. It has found it difficult to raise capital through the strategic sale of assets. Since 2019, the government has been trying to sell its 53.29 percent stake in retailer-cum-refiner Bharat Petroleum Corporation Ltd and the pandemic has further delayed the stake sale process. Last year, the FM had announced the intention of listing India’s largest insurer Life Insurance Corporation (LIC), which was expected to fetch nearly Rs 90,000 crore. That process too will spill over into FY22. Over the years, the government has pinned its hopes on the sale of debt-laden Air India Ltd which it is yet to accomplish. With the country’s GDP contracting for the first time post- independence, the economy is in dire need of an economic boost and the government can only spend if it manages to fill its coffers through the asset sale programme.
While these are some large cheques that the government is keen to encash in the coming year, what hasn’t really helped is the fact that even though capital markets had their best bull run during the year, the government managed to float merely two initial share sale programs. It listed Mazgaon Dock Shipbuilders Ltd from which it managed to raise Rs 443 crore and Indian Railway Finance Corporation Ltd worth Rs 1,541 crore.
“What happens for a country as big as India is that the process can be very lumpy. They are now very active and they are learning how the capital markets work and how this process should be driven. And we can have a big next year, probably they can do the LIC IPO which can help achieve your other objectives of primary investment and growth,” says Nirmal Jain, chairman and founder of IIFL Group.