Budget 2018-19: New Target For Disinvestment Reaches 1 Trillion

| January 26 , 2018 , 17:59 IST

On this year's upcoming Budget, Government is planning to introduce some new changes related to disinvestment programme. The Finance Ministry could set an even higher target of Rs 90,000 to 1,00,000 crore for 2018-19.

This reform will encompass the sector of Air India, other privatized initiatives, mergers, initial public offering, the centres two exchange-traded funds, buybacks and offers-for-sale and even monetization of land assets.

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This year's Budget rectifications follow the success of last year's disinvestment programme. The budgeted estimate for 2017-18 is Rs 725 billion (Rs 72,500 crore), the highest ever for a year so far. With the acquisition of Hindustan Petroleum by ONGC expected to be completed soon, that target will be easily outstripped.

As of January 22, divestment proceeds stood at Rs 555 billion (Rs 55,500 crore). ONGC’s acquisition of HPCL’s 51 percent stake is valued at Rs 369 billion (Rs 36,900 crore). That would take divestment proceeds to Rs 925 billion (Rs 92,500 crore) for 2017-18.

Finance Minister Arun Jaitley will present the upcoming 2018-19 budge, as it is expected from the budget to not to be outright populist but will come with the increase in allocation of schemes and public expenditure. He will require resources and disinvestment are expected to be the major one.

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This year, NBCC Ltd a state-owned construction company, which has already bought Hindustan steelworkers construction Ltd may also buy other smaller construction and engineering PSUs, said sources. these PSUs includes Hindustan Prefab, Engineering Projects India Ltd, NPCC Ltd, and HSCC Ltd this move will lead new investments in the following sector.

The centre launched its second PSU ETF, the Bharat 22 ETF in November and granted Rs 145 billion (Rs 14,500 crore). An official said that there is still a massive interest amongst investors, and a second tranche is certain to be launched early next fiscal. There could be further tranches of its first PSU ETF as well.

Government is preparing to carry out new advancements for a number of OFSs as well. Finance Ministry has plans to include the betterment of  10 percent stake in NHPC, Power Finance Corporation and SAIL, 15 percent in NLC, five percent in Rural Electrification Corporation and three percent in Indian Oil. Buybacks by PSUs, are expected to continue next year as well.