Govt focuses on the integrated wealth management: DIPAM Secretary

The objective is to no longer pursue a numerical goal as disinvestment proceeds are not critical for meeting the annual fiscal deficit target, says DIPAM Secretary

The world disinvestment has no specific mention in the budget for FY25, indicating a major policy shift in the government’s approach . The objective is to no longer pursue a numerical goal as disinvestment proceeds are not critical for meeting the annual fiscal deficit target, said Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey. In an interview with Rajeev Jayaswal, he underscored that the government’s emphasis has now shifted to an integrated public wealth management. Edited excerpts from an interview:

Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey (AFP)

Disinvestment has no mention in the interim budget. It has no specific mention under the non-debt capital receipts unlike past. Why?

Under the head of non-debt capital receipts, there are two items – recovery of loans and miscellaneous capital receipts, which used to have two components – disinvestment and other receipts. In this year’s budget (2023-24 BE) ₹51,000 crore was under disinvestment and ₹10,000 crore was in other receipts. So, the total was ₹61,000 crore. That has been now [in 2024-25] combined. This means, there is no specific number for disinvestment and that change has been also made in the RE [revised estimate of 2023-24]. So, ₹61,000 crore in BE of FY24 is now ₹30,000 crore in RE of FY24. And, the same is ₹50,000 crore for BE 2024-25. So, miscellaneous capital receipts of ₹50,000 crore in BE FY25 include receipts on account of management of equity investments and public assets through various mechanisms. Usually, people only focus on disinvestment while ignoring huge wealth creation by public sector enterprises, which is reflected under head of dividends and profits. So, in our new paradigm, we are having integrated and holistic approach.

So, what is the changed approach?

We are now focusing on value creation so that value of public assets and enterprises is optimised. Some of the value could be earned through monetisation, and some through income in terms of dividends. Even disposal should be linked with the right value of the asset. For example, if the market is depressed, certainly it is unwise to sell. But, if the market is rising, then also you have to judge, what is the right time to get the maximum value. You have to take this call. Similarly, on dividends, we have to ensure that companies keep enough profits for capital expenditure and expansion. Hence, the government would take a part of their net profit as dividend. This is the concept of integrated wealth management.

Is this a departure from the earlier approach when disinvestment proceeds were considered crucial for meeting the fiscal deficit target?

You bank on disinvestment proceeds for meeting fiscal deficit only when your revenue stream is weak and you don’t have any control on expenditure. Your fiscal deficit number are not dependent on this small (number of) ₹50,000 crore on [a total budget of] ₹47 lakh crore. When your revenue stream is buoyant and your economy is growing fast, you don’t sell your assets in desperation. Disinvestment proceeds may help, but it is not a panacea for fiscal deficit. One should not forget that besides disinvestments, dividends are also helping the government’s revenue stream. But people don’t talk about it.

What about offloading small stakes in major public sector corporations?

A lot of companies have already reached 51% level. So, we cannot disinvest further, unless we fully privatise them. Privatisation is also based on a principle that minimum presence [of public sector undertakings] will be maintained in every sector. And they have to continually perform because if you are an important organisation in the economy, you cannot sit idle, thinking that in future you could be disinvested. Because income has to be continuously created as the government also needs dividend. So, it is not this or that. The government will also require dividends on a continuous basis. So, I will have to manage some disposal of stocks, I have to manage dividends… continuously, I have to ensure [adequate] capex of the enterprises, and capex will need more money, so I cannot take too much of dividend also.