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Privatisation plans lagging target, Air India stake sale a booster shot


Handover of Air India to the Tata Group will bolster government’s privatisation roadmap, which has been significantly lagging the Budget targets so far. Tata has taken over Rs 15,300 crore worth of Air India debt and paid

Rs 2,700 crore to the government in cash.The government is also hoping to bring the initial public offering (IPO) of Life Insurance Corporation (LIC) before the end of this fiscal year, while privatisation of Neelachal Ispat Nigam is expected to be completed shortly.

Depending upon the size of the offering, LIC’s IPO and other transactions could help the Centre partly bridge its Rs 1.75-lakh-crore FY22 disinvestment target, of which less than 10 per cent has been raised so far. Including funds received from Air India, the government has, so far, raised Rs 12029.90 crore via stake sales.

Other companies in line for privatisation include Shipping Corporation of India, BEML, Neelachal Ispat Nigam Ltd, Container Corporation of India and Pawan Hans. The government has received financial bids for Pawan Hans and Neelachal Ispat Nigam, and privatisation process has moved to its concluding stage. Privatisation and asset monetisation has been the foremost component of this year’s Budget. The Finance Ministry has unveiled a comprehensive  National Monetisation Pipeline, but state-owned banks’ privatisation, a key Budget announcement, is yet to move forward.

State-owned banks and downstream oil major BPCL privatisation is expected to stretch into next year. The enabling framework to enable the privatisation of one of the four general insurance companies, another key budget announcement, has been done. The amendments to the General Insurance Business (Nationalisation) Act being cleared in the Monsoon session of Parliament, but the insurer targeted for the stake sale is yet to be finalised.

Even as the government is working on pushing the IDBI Bank stake sale this year, regulatory issues relating to promoter ownership and volatility is markets could stretch it into next year. The Banking Laws (Amendment) Bill, 2021 “regarding privatisation of two Public Sector Banks” was listed for introduction in the Winter Session of Parliament. But it was not taken up by the Cabinet, despite a draft being ready. Pullback on the farm laws, bank unions’ opposition to privatisation and upcoming Assembly elections seems to have had a bearing on privatisation timing.

Apart from privatisation, asset monetisation is the key element of this year’s Budget and the government has put out a four-year National Monetisation Pipeline worth an estimated Rs 6 lakh crore. Roads, railways and power sector assets will comprise over 66 per cent of the total estimated value of the assets to be monetised, with the remaining sectors including telecom, mining, aviation, ports, natural gas and petroleum product pipelines, and warehouses.





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Delhi News

Government plans to wrap up selloff of Air India, BPCL this fiscal


NEW DELHI: The Centre hopes to complete stake sales in Air India, BPCL and clutch of state-run companies, that have been identified, in the current financial year and expression for interest for sale in logistics firm Concor is expected shortly after the land lease policy is finalised, DIPAM secretary Tuhin Kanta Pandey said on Wednesday.
He said the government expects Rs 50,000 crore in dividends from public sector companies in the current financial year and is also working on a Rs 6 trillion asset monetisation plan and hopes to come out with plans for GAIL pipelines soon.
“The disinvestment agenda has been put on fast track through the unveiling of the new PSE (public sector enterprises) policy, notified on February 4, 2021, which is expected to be an important policy for the next five years and will result in increase in privatisation in the economy”, Pandey told an interaction at the annual session of CII.

He said the major disinvestments in pipeline this year as underlined in the Union Budget, include Air India, BPCL, Shipping Corporation of India, BEML, Pawan Hans and Neelachal Ispat Nigam and in all these enterprises, the government has got sufficient interest from bidders, who are now at the second stage of due-diligence.
“After 17 years, the country will actually see privatisation, since the last time in 2003-04 in the then NDA government,” said Pandey. He also reiterated that the government aims to list state-run insurance behemoth LIC by year-end. “A mega listing in LIC is planned this year, which will be the biggest of its kind in history of Indian stock market.”
The Centre has set a target of raising Rs 1.75 lakh crore from privatisation of state run enterprises in the current fiscal and Pandey said the process had been significantly impacted by the second Covid-19 wave, although it was back on track now.
“A big asset monetisation pipeline is in place where the government looks forward to private sector participation. The government is also talking about closure of enterprises quite openly for the first time, in case it cannot be disinvested. In the non-strategic sectors, the direction is that either we privatise or close. Hence, apart from NCLT, there will also be a lot of assets on offer from the public sector.”





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