Explaining the roadmap of the government’s Rs 80,000-crore disinvestment target for 2018-19, announced in the Budget, Secretary of Department of Investment and Public Asset Management Neeraj Kumar Gupta said that the department is not looking only at raising funds through selling the Centre’s stake in public sector companies but also at increasing the value of the government-owned assets. Gupta said that since 2016, the valuation of the assets held by the government in PSUs has increased from Rs 10 lakh crore to around Rs 13 lakh crore, of which, during 2017-18, nearly Rs 1 lakh crore has been divested.
“There has been a paradigm shift based on a review by Prime Minister Narendra Modi in early 2016, after which, in the Budget of 2016, the department’s mandate was changed from disinvestment to efficient public asset management. Before that, there was no department to look after how the government’s investment in CPSEs, which is in the ballpark of Rs 10 lakh crore – is managed. If you see the same for a private conglomerate, they will know pretty well which company is doing well, which company is not doing well, where I should exit, where I should invest more, which company needs more capital deployment. None of these aspects was covered for CPSEs,” Gupta told The Indian Express in an interview.
However, he played down the impact of the government imposing 10 per cent long-term capital gains tax – on profits over Rs 1 lakh made through equity instruments held for over a year – on the disinvestment target for the next financial year. “I don’t see an impact of LTCG (on disinvestment target) because such yields are not available anywhere. For these yields, you have to come to the Indian market,” he added.
During 2018-19, apart from the sale of residual equity and minority sales in government companies, the Centre is banking on strategic sales in two dozen companies in the next year. Further, finance minister Arun Jaitley said on Thursday that three public sector general insurance companies – National Insurance Company, United India Assurance Company and Oriental India Insurance Company – will be merged into a single entity and subsequently be listed on the stock exchanges.
In the current year, the government could not pursue any strategic sale, though the sale of its stake in Hindustan Petroleum Corporation Ltd to Oil & Natural Gas Corporation for Rs 36,915 crore helped the government comfortably exceed the budgeted target for disinvestment. Apart from this, through deals among the state-owned petroleum companies, the government has raised another Rs 55,560 crore from stake sale as on January 22, taking the total collection to Rs 92,475 crore so far, as per data from Department of Investment and Public Asset Management (DIPAM).
Gupta said that the DIPAM’s 2016 policy on capital restructuring and management has resulted in a sharp increase in dividend payouts by public-sector companies. “The dividend payout has grown over 40 per cent in 2016-17 over 2015-16. In terms of targets, 2011-12 to 2015-16, average realisation was Rs 20,500 crore, the average number of transactions were six to seven, and nature of the transactions was offer for sale, apart from two buybacks in 2015-16.
In 2016-17, there had been 22 transactions, which included all formats – OFS, buybacks, block deal, bulk deals, ETFs. In 2017-18, so far we have done 27 transactions, which include all these with IPOs,” he added.