The upcoming Union Budget is expected to maintain its revenue target from disinvestment and asset monetization at around ₹50,000 crore, similar to the interim Budget.
According to two officials familiar with the government’s plans, the strategy of not setting a separate target for disinvestment but considering dividends comprehensively will continue. This shift comes as dividends from listed public enterprises have exceeded expectations in FY 24.
One official mentioned, “Some transactions are ongoing, and there has been little change from the interim Budget. The approach of not specifying targets for divestment will persist.”
The interim budget introduced this year saw a departure from setting specific revenue targets from disinvestment or stake sales in central public sector enterprises that the government would exit partly or entirely.
Strategic disinvestment, where a CPSE is sold to a private entity resulting in a transfer of management control, was highlighted in this budget.
The budget impacted the tabulation of capital receipts by combining asset monetization and disinvestment under the single category of ‘miscellaneous,’ contributing ₹50,000 crore. Dividends from CPSEs were estimated separately at ₹48,000 crore.
In FY24, the government received ₹32,507 crore, evenly split between disinvestment and asset monetization, surpassing the budget projection of ₹30,000 crore.
Dividend receipts have consistently exceeded budget estimates for three consecutive years. In FY24, the government earned ₹63,749.29 crore from PSU dividends, surpassing revised estimates of ₹50,000 crore and budget estimates of ₹43,000 crore.
As of July 10, no proceeds from disinvestment had been recorded, with dividend receipts standing at ₹4,917.6 crore from government-held stakes in various CPSEs.
Disinvestment proceeds typically arise gradually, either through minority share sales via FPOs or strategically selling a majority stake for a lump sum amount.
Ongoing privatization efforts include strategic sales of various entities like IDBI Bank, NMDC’s steel plant, SAIL’s Salem steel plant, and others.
Mint had previously reported that the divestment of IDBI Bank was expected to accelerate in the latter part of the fiscal year.
The Union Cabinet’s approval for the sale of Container Corp. of India Ltd awaits action, while plans are underway to list NTPC Green Energy and Indian Renewable Energy Development Agency Ltd.
There is significant potential for further disinvestment, with CareEdge Ratings estimating a total divestment potential of around ₹11.50 trillion. The government has already divested ₹5.20 trillion since 2014, with CPSEs and PSBs projected to contribute the most.
