Finance Minister Arun Jaitley is expected to announce target while presenting an interim budgetThe government is likely to seek to raise about Rs 80,000 crore ($11.21 billion) through sale of state-owned assets in next fiscal year, beginning April 1, two government sources with direct knowledge of Budget discussions told Reuters on Tuesday.The target, which is same as for current financial year, includes proceeds from expected privatisation of loss-making national carrier Air India, and sale of an insurer to be created by merger of three state-owned firms, sources said.
It will also involve sale of units in an exchange traded fund consisting of minority stakes in about 20 state-owned companies, they said.Finance Minister Arun Jaitley, who is currently in United States for a medical check-up, is expected to announce target while presenting an interim budget on February 1, said one of sources.The government could also sell shares in a number of state-owned companies through initial public offerings, sources said.
Possible candidates for these include Telecommunications Consultants India, Indian Railways' subsidiaries IRCTC, RailTel Corporation India and National Seeds Corporation (NSC), they added.The government has proposed merging three state-owned general insurance companies - National Insurance, Oriental Insurance and United Insurance - and then listing single entity.The government failed to attract bidders for Air India when it tried to sell a majority stake in 2018.
But airline is now being restructured and to make it more attractive just over half of its debt will be placed in another company and will not be part of any future sale, one of sources said.The receipts target could change if government of Prime Minister Narendra Modi gets less of a mandate from voters in next general election, which must be held by early May.
PM Modi's ruling Bharatiya Janata Party lost some key state elections at end of last year, opening up possibility that it might lose power or only get returned by forming a coalition with some other parties."The actual receipts from privatisation programme will depend how strong is mandate of next government, and its commitment to privatisation," said first official, who declined to be named as budget details are not public.If PM Modi got a strong mandate, government could even consider selling majority stakes in some of country's many state-owned banks, official said.Any change would be made in a full-year budget, likely to be presented in July.Behind targetThere are also likely to be concerns about whether government will be able to reach goal.
With about two months to go before current year closes on March 31, government has so far managed to raise only Rs 35,100 crore, about 43 per cent of Rs 80,000 crore targeted.
And some of those receipts are result of state-owned companies buying their own shares back from government.The government sources said they expected there would be significant progress towards this year's target in next few weeks."We have not asked government to revise down target this year," said second official.The struggle to meet current year's target has promoted some bankers and credit ratings analysts to suggest government would likely miss this year's budget target by around Rs 20,000 crore.In a note last week, Care Ratings said meeting share sale target will be challenging for government this year given volatile conditions in financial markets.($1 = Rs 71.35) Find latest news, updates and videos on Budget 2019, Budget expectations, tax and policy announcements here.
Like us on Facebook or follow us on Twitter for more on Union Budget 2019.