The government on Wednesday approved share-sale plans in three major state-owned companies — Coal India Limited (CIL) , National Hydroelectric Power Corporation (NHPC) and Oil and Natural Gas Corporation (ONGC) — that can potentially earn the exchequer Rs 44,000 crore.If successfully concluded, the government can more than meet the Rs 43,425-crore target it had set for earnings from stake sales in public sector companies in the current financial year.
It would also be the most the government has ever earned as disinvestment revenue in a single year, surpassing the previous best of Rs 23,857.25 crore in 2011-12.
Revenue from selling shares in state-owned companies is critical to the government’s plans to keep the fiscal deficit — shorthand for the amount of money it borrows to fund its expenses — at 4.1% of the gross domestic product (GDP) in 2014-15.
“Disinvestment proposals of ONGC, Coal India and NHPC have been cleared by the cabinet committee on economic affairs (CCEA),” said an official statement after a meeting of the CCEA, which is headed by Prime Minister Narendra Modi.
The CCEA cleared a 10% stake dilution in Coal India, 5% in oil production major ONGC and 11.36% in power company NHPC.
At current market prices, the sale of shares could garner over Rs 23,000 crore, Rs 18,000 crore and Rs 2,800 crore, respectively.
Besides, the previous government had cleared disinvestment in SAIL and according to sources, the 5% stake sale in the state-owned steel maker could take place this month itself, fetching the Centre an additional Rs 1,600 crore.
The government has missed its disinvestment target for five consecutive financial years. Last year, it could raise only `16,027 crore against a budgeted target of Rs 40,000 crore.
The Centre has already selected merchant bankers to manage the ONGC and NHPC offers and will likely do the same for Coal India shortly, although it has to convince labour unions opposed to share sale plans in the world’s largest coal mining company.
The cabinet approval came weeks after capital market regulator Securities Exchange Board of India approved sweeping new norms, including making it mandatory for listed PSUs to pare promoters’ shareholding to 75% within the next three years.
The government currently holds stakes of 89.65% in Coal India, 85.96% in NHPC and 68.94% in ONGC.
The government has missed its disinvestment target for five consecutive financial years.
In 2010-11 and 2011-12 fiscals, the government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year.
In 2012-13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore.
In 2013-14, the government could raise Rs 16,027 crore, as against the budgeted target of Rs 40,000 crore. The target in revised estimates was scaled down to Rs 16,027 crore.
(With PTI inputs)