Govt may miss disinvestment target by Rs 50,000 crore: Sources

Govt may miss disinvestment target by Rs 50,000 crore: Sources

The government could miss its FY20 divestment target by as much as Rs 50,000 crore since privatisation of Air India, Bharat Petroleum Corporation (BPCL) and Container Corporation of India (CONCOR) is unlikely to be completed by March 2020, Mint reports.

The government has set a disinvestment target of Rs 1.05 lakh crore for FY20, of which it has managed to raise only Rs 17,364 crore. It may see a shortfall of Rs 40,000-50,000 crore in Budget 2020 since the divestments of the state-run companies might not be completed by March 31, 2020, the report stated.

The shortfall will also affect the government’s ability to meet its FY20 fiscal deficit target of 3.3 percent of gross domestic product (GDP), the report said.

“There is a lot of interest in the market among investors for the companies on offer. The transaction may also be completed successfully, but now it looks difficult that the money will reach the coffers before March 31,” a finance ministry official told Mint.

The government plans to sell its entire 100 percent stake in Air India. In BPCL, it will divest its 53.29 percent stake, and in COCNCOR it will sell 30.8 percent of its 54.8 percent stake.

Potential buyers might request for more time to conduct due diligence, the report added.

The process might get delayed by another five to six weeks if the stake sale of the listed entities triggers an open offer for minority shareholders according to SEBI (Securities and Exchange Board of India) guidelines, an official told the publication.

“Then the successful bidder will have to get clearance from Competition Commission of India (CCI), only after which it will transfer the money to government’s account,” the official said.

The expected disinvestment proceeds will still be mentioned in the revised estimate for 2019-20 'to maintain the books', the official added.