The Central Government is set to continue the strategic shift introduced in the last interim budget by not setting specific disinvestment targets in the full Budget to be presented this July. Instead, disinvestment will be categorized under capital receipts, maintaining the approach adopted earlier this year.
A government official highlighted this shift, saying, ‘We have already changed the disinvestment strategy by letting go of the target. The budget item of other capital receipts is going to list disinvestment and asset monetization pipeline under one.’ This strategy signifies a move away from setting rigid targets, which has been a practice since the 1991-92 budget, and focuses more on strategic value creation.
Historically, the Union Budget documents began mentioning disinvestment in 1991-92 with an initial target of Rs 2,500 crore. This target peaked at Rs 2.10 lakh crore in FY21, including sales of government stakes in central public sector undertakings, public sector banks, and financial institutions.
‘We have changed our strategy to now a value-creating strategy from a target-based strategy,’ the official added. He emphasized that the new approach is not a “fire sale process,” but a “calibrated approach.”
The Public Sector Enterprises policy, a part of the Aatmanirbhar Bharat initiative announced in 2020, aims to minimize government presence in such undertakings and open up new investment opportunities for the private sector. This policy categorizes sectors into strategic and non-strategic, guiding the government’s approach towards public sector enterprises (PSEs).
Strategic sectors include Atomic Energy, Space and Defence, Transport and Telecommunications, Power, Petroleum, Coal, and other minerals, Banking, Insurance, and financial services. In these sectors, the public sector will maintain only a minimal presence. Remaining central public sector enterprises (CPSEs) in these sectors will be privatized, merged, subsumed into other CPSEs, or closed. In non-strategic sectors, CPSEs will either be privatized or shut down.
The interim budget listed disinvestment under the general category ‘Miscellaneous Capital Receipts’ without directly mentioning ‘disinvestment.’ This description now includes ‘receipts on account of management of equity investments and public assets through various mechanisms,’ a shift from the previous explicit listing under ‘Miscellaneous Capital Receipts.’
Sources indicate that ongoing transactions, such as those involving IDBI and HLL Lifecare, are high priorities for the government. Movement on the IDBI disinvestment is expected within this year. “Our focus is to complete sale processes in the pipeline. The ones we are not able to conclude, we shall go for re-bidding,” the official shared.
For the Interim Budget FY25, the Centre has set an estimate of Rs 50,000 crore under miscellaneous capital receipts, which is likely to remain the same in the upcoming full budget.
