The Cabinet Committee on Economic Affairs, on Wednesday approved the strategic divestment of government holdings in five central public sector enterprises (CPSEs). They are Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India Ltd (SCI), Container Corporation of India Ltd. (CONCOR), Tehri Hydro Development Corporation India Ltd (THDCIL) and North Eastern Electric Power Corporation Limited (NEEPCO).
Of these THDCIL and NEEPCO will be sold to National Thermal Power Corporation (NTPC), another government-owned company.
The other three, BPCL, SCI and CONCOR, are listed on Indian stock exchanges. So, their total value will be the current market capitalisation of their shares. The government’s potential earnings from these divestments will be the value of its stake in these companies’ market capitalisation.
Based on the closing price of these companies on November 20, on the Bombay Stock exchange (BSE), this amount comes to Rs 75,843 crore. This is 72% of the Rs 1.05 lakh crore which has been budgeted as disinvestment earnings in the 2019-20 Union budget. This amount is 11% of the budgeted fiscal deficit for 2019-20.
Data from the ministry of finance shows that the government had already realised Rs 20,598 crore of this target by September. If the government manages to sell its stake in BPCL, SCI and CONCOR at current market capitalisation levels, it will mostly fulfil its targeted disinvestment earnings for the current fiscal year.
How much of a cushion these disinvestment proceeds provide for meeting overall fiscal targets will depend on revenue receipts. The government had estimated a revenue loss of Rs 1.45 lakh crore due to concession in corporate tax rates, which was announced in September.
There is also uncertainty regarding Goods and Service Tax (GST) collections, which missed last fiscal year’s targets by more than Rs 1 lakh crore.
