High Expectations of Growth Spurs Largest Disinvestment Worth Rs 45,000 crore

High Expectations of Growth Spurs Largest Disinvestment Worth Rs 45,000 crore

The Cabinet Committee on Economic Affairs (CCEA) has recently approved disinvestment of three high-profile public sector undertakings (PSUs) including Coal India, Oil and Natural Gas Corporation (ONGC) and National Hydroelectric Power Corporation (NHPC), which is supposed to yield a record total of Rs 45,000 crore for the government. This is to be achieved by means of selling shares worth 10% stake in Coal India which, at the current market price, would yield around Rs 23,000 crore. In ONGC, 5% of the stake is to be sold, priced at around Rs 18,000 crore and another 11.36% of stake in NHPC which is expected to fetch around Rs 2,800 crore at the prevailing market prices.

It would be the highest amount earned by the government ever by means of disinvestment in a single year with the existing record standing at Rs 23,857.25 crore in the year 2011-12. The current move by CCEA to sell stakes in major PSUs is expected to help meet the fiscal deficit target for the current financial year. Apart from this, retail investors are likely to be allocated a quota of almost 20% in selling of the stakes for these PSUs which would be an added advantage for small investors.

Apart from these three PSUs, the last government had already cleared disinvestment in Steel Authority of India (SAIL) which is supposed to take place soon with a 5% stake being sold for an approximate amount of Rs 1,600 crore. It might be of interest to note that the current government stake in Coal India is 89.65%, in NHPC it is 85.96% and in ONGC it holds a stake of 68.94%. The current announcement has come after Securities Exchange Board of India (SEBI) has come up with a set of revised norms. The new set of regulations lay down that listed PSUs have to cut down on promoters’ shareholdings to 75% within next 3 years.