All You Need To Know About Disinvestment Ahead Of Budget 2024 — In Charts

Revenue metrics for the government of India have performed beyond initially set budget expectations in FY24, easing the task of containing fiscal deficit.

However, the exception has been disinvestment receipts, which have missed the target in the recent past, raising concerns about the fiscal marksmanship.

The government, as on date, has collected Rs 12,504 crore against a target of Rs 51,000 crore in FY24. This was primarily led by the offers for sale of Coal India Ltd., NHPC Ltd., Rail Vikas Nigam Ltd. and SJVN Ltd., among other transactions.

Last year, the department managed Rs 35,294 crore against a revised estimate of Rs 50,000 crore, which was already slashed from a FY23 budget expectation of Rs 65,000 crore.

According to Lekha Chakraborty, professor at the National Institute of Public Finance and Policy, while interest payments don't pose a perception that the debt is "mounting' and unmanagable", the pressure point is not getting the fiscal marksmanship right for disinvestment proceeds.

"...we are not able to match our aspirations as the way it is envisioned... as of now, the taxes are buoyant making the path to (fiscal) consolidation through tax buoyancy, however expenditure compression could have adverse macroeconomic consequences," she told NDTV Profit.

Let's take a look at disinvestment over the years:

Amid slow disinvestment, healthy dividends continue to be an asset, bringing up the total receipts of the government.

The Department of Investment and Public Asset Management looks at dividends and receipts as a combined target, Secretary Tuhin Kanta Pandey told NDTV Profit ahead of the IREDA IPO in November 2023.

"As DIPAM, we are responsible for the CPSE dividend and disinvestment put together. We have done about Rs 28,000 crore till date. And we have a combined target of disinvestment and dividend of Rs 94,000 (crore). So, we'll definitely try and work hard to move near it," Pandey had said.

A report by CareEdge Research forecasts the FY24 divestment will close at approximately Rs 15,000 crore, missing out on the anticipated "big-ticket sale of IDBI Bank Ltd.". The year also saw Pawan Hans Ltd., Bharat Petroleum Corp., and Shipping Corp. face roadblocks hindering their sales and pushing their status into uncertainty.

Aditi Nayar, chief economist at ICRA Ltd., told NDTV Profit in an earlier interview: "...broadly, the disinvestment should be kept at a modest level. (The) market doesn't like to see very large numbers, then they start doubting the fiscal math early on, and that's not very helpful for yields."