The government on Wednesday set an ambitious target of garnering Rs 72,500 crore through the disinvestment route in 2017-18, a 60 per cent increase over the 2016-17 target of Rs 56,500 crore. This is the highest ever divestment target set by any government in India outdoing the Rs 69,500 crore of 2015-16.
The increase comes even as successive governments have forever failed to achieve these targets. Even in the current financial year, the government is hopeful of raising only Rs 45,500 crore, which would be 20 per cent less than the target it had set at the start of the year. That, has been the government's best showing so far. In fiscals 2014-15 and 2015-16, the government did not even manage half the targets. In the last 26 years, government has failed to achieve its target 17 times.
"It is true we have not been able to meet the budgetary targets but you should also look at our track record and the sheer volume of divestments," said Finance Minister Arun Jaitley. "Till a few years ago, government would generate Rs 25-30,000 crore by selling stakes in 5 years. Today we are doing that much in just one year. Next year, one major item that will be listed for disinvestment are the general insurance companies."
Other state run companies that will see a divestment in 2017-18 are railway public sector enterprises IRCTC, IRFC and IRCON. Divestment through exchange traded funds comprising shares of 10 central PSEs are also in the offing. Last month, government raised Rs 6000 crore through its second tranche of CPSE ETF.
"We will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other government holding will be launched in 2017-18," Jaitley said.
The government has often come in for criticism in the way disinvestments have been carried out in the past where state run Life Insurance Corporation emerges as a white knight in cases where the interest from retail and institutional investors is low. LIC has participated in stake sale processes at the last moment in at least 6 occasions in the last 2 years.
"Now they are saying enterprises will themselves buy their shares, and that will be called disinvestment. Also, they are asking each enterprise to buy the shares of another enterprise and call it disinvestment. Third, the state owned financial institutions will buy stake (in PSEs) and that is termed disinvestment", says former disinvestment minister Arun Shourie. "It is a fraud because you are taking it from one pocket, putting it in another and giving it a big name".