DISINVESTMENT
Budget 2024: What is a strategic sale? How is it different from disinvestment?
Budget 2024: In the Interim Budget, Finance Minister Nirmala Sitharaman revised India's divestment target for FY24 to Rs 30,000 crore, down from the previously budgeted Rs 51,000 crore. Looking forward to FY25, the target has been set at Rs 50,000 crore. Despite privatizing Air India and NINL, the government has consistently missed divestment targets for five years. So far this fiscal year, only Rs 10,051.73 crore has been raised, with major contributions from CPSEs' IPOs and OFS'.
Budget 2024: What is known as fiscal glide path?
Budget 2024: India struggles to meet the 4.5% GDP fiscal deficit goal for 2025-26, despite reducing from 9.5% due to COVID-19. The 5.9% target for 2023/24, down from 6.4% in 2022/23, faces scrutiny amid calls for fiscal flexibility. The fiscal glide path, proposed by the NK Singh committee, aims to decrease deficits gradually. Economic slowdown challenges hitting tax revenues may lead to missing targets, with an escape clause allowing a 0.5% GDP deviation. Government financing methods for deficits might trigger inflationary pressures, impacting spending and investments.
Budget Preview: Govt could use part of RBI dividend to reduce fiscal deficit, says Motilal Oswal
A transfer of Rs 2.11 lakh crore by the RBI implies excess receipts of about Rs 1.5 lakh crore in FY25, the MOFSL note said. MOFSL sees the new government largely retaining its tax and non-debt capital receipt (including disinvestment) projections as presented during the interim Budget in February.
Adani Ports to enter Sensex on Monday, Wipro to exit as part of semi-annual rejig
Adani Ports’ Sensex inclusion will trigger passive inflows of $259 million and 14.9 million shares are expected to be added, according to Nuvama’s estimates. Wipro’s exclusion could see outflows of $170 million.
Equity taxation tweaks, PSU disinvestment among 6 factors that could break markets: Kotak Equities
Indian benchmark index Nifty 50 has surged by 1,682 points or 7.6% since the June 4 debacle, driven by non-institutional investors and select institutional investors, as noted by Kotak Institutional Equities. The market's sentiment remains positive despite potential risks, with a focus on upcoming state elections and regulatory oversight.
A 60% fall! Does falling FDI call for policy recalibration?
RBI reported a 62% drop in net FDI flows into India to USD 10.6 bn in FY24, the lowest since 2007. Select sectors benefit from the "China+1" trend, attracting opportunistic foreign investments. India requires comprehensive policy recalibration, aligning with sectoral strengths, and genuine market access.
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If BJP loses power Nifty valuations can crash to pre-NDA levels, warns UBS
In case the ruling BJP fails to retain its single majority but forms a govt with the NDA with a majority (> 272 seats), then the market can be slightly less confident about policy stability as fiscal consolidation could be slower than envisaged. Historically, any underperformance triggered by poll results tends to reverse in the medium to long term, as Street and businesses adapt to new government policies.
Shipping Corporation of India, NMDC Steel selloff to get fresh push after elections
The government plans to disinvest in Shipping Corporation of India (SCI) and NMDC Steel after the general election. SCILAL, a demerged entity of SCI, will be listed, setting the reserve price for SCI. The Maharashtra government waived stamp duty for SCILAL's demerger.
Hindustan Zinc shares double in 1 month but the boom isn't so much about zinc
Hindustan Zinc is also the best-performing metal stock in 2024 so far with a staggering return of 146% YTD. It is India's only silver producer and after recording its highest-ever silver production in FY24, it has become the third-largest silver producer globally.
Air India fundamental rights claims not valid since it is now a private airline, Supreme Court rules
The Supreme Court ruled that Air India ceased to be a state entity post-disinvestment and takeover by Tata Group, hence not liable to fundamental rights claims. Dismissing appeals against Bombay High Court's verdict, it emphasized Air India's transition to private entity status, precluding writ petitions' maintainability.
Post-Covid capex pumps PSU muscles
A reappraisal of PSUs, however, could slow the longer trend of GoI getting out of business. And it needs to filter out the temporary effects of economic management. PSU banks are unlikely to retain their new-found health against private competitors for an extended period. Government capex, similarly, has a shelf life, after which private investment is expected to take over. That means companies borrowing from the cheapest lender, often from abroad, to build capacities. Neither consumption- nor investment-led growth assures a special place for PSUs. They will have to compete.
Section of AIESL's permanent engineers plans to go on strike on May 24
1,700 AIESL engineers threaten strike from May 24 for immediate implementation of revised salary payments, citing discrimination issues and unfair labor practices.
Dividend from non-financial CPSEs at ₹63,749 crore
In the fiscal year 2023-24, the government's dividend collections from non-financial central public sector enterprises and entities with minority stakes reached a record high of ₹63,749 crore, showing a 27.5% increase over the revised estimate. However, disinvestment proceeds fell slightly short of expectations, totaling ₹16,507 crore, mainly due to the IDBI Bank sell-off process spilling over into the current fiscal year. The government achieved divestment through the dilution of minor stakes in 10 entities, primarily via the offer for sale route.
Govt garners Rs 16,507 crore via public sector enterprises disinvestment in FY24
The budget had pegged disinvestment proceeds for 2023-24 fiscal at Rs 51,000 crore. However, the revised estimates (RE) on February 1, 2024, did away with separate head for disinvestment receipts.
Commandeering heights: Shift from disinvestment to enhancing PSU value is smart economics and nifty politics
PSU reform and privatisation have been ongoing since the times of Rajiv Gandhi, P V Narasimha Rao, and Atal Bihari Vajpayee. Under Narendra Modi's leadership, PSU reform has been further expanded, including the sale of Air India to Tata Group.
High selloff target can potentially create overhang in the market, says Dipam Secy
In a rare move, the interim budget for FY25 clubbed the government's disinvestment and asset monetisation targets, instead of declaring them separately. The combined realisation is budgeted at Rs 50,000 crore for FY25, against Rs 30,000 crore (revised estimate) in FY24 and Rs 61,000 crore in the BE for this fiscal. Of course, the combined target is still less than 2% of the government's expected non-debt receipts for FY25.
Capital receipts of Rs 30,000 cr in FY24 RE includes disinvestment, asset monetisation: DIPAM Secy
The government has budgeted Rs 30,000 crore from other capital receipts in the Revised Estimates for the current fiscal. For 2024-25, the amount is budgeted at Rs 50,000 crore. DIPAM Secretary Tuhin Kanta Pandey said the Budget does not have any specific target for disinvestment for the next fiscal and the Rs 50,000 crore receipts is estimated to come from disinvestment and asset monetisation, as well as capital receipts, which are not classified elsewhere.
It’s business as usual & that is a positive; government can be more aggressive in disinvestment: Sunil Singhania
Sunil Singhania discusses the Interim Budget, stating that nothing major was expected as it is a vote on account. He notes the continuation of fiscal prudence and highlights the surprise of the fiscal deficit target for next year being 5.1%. Singhania mentions the positive outlook on the Indian economy and the possibility of the government being more aggressive on disinvestment. He also emphasizes the consistency in governance and expresses optimism in sectors like railways and solar rooftop generation.
Will Budget 2024 care to sell family silver as privatisation drive flops?
The government is likely to miss its divestment targets for the fifth consecutive year, raising concerns about its privatisation plans. Data shows that the government has struggled to raise even half of the targeted proceeds for this fiscal year. Analysts are sceptical about further sales, especially with only six months left in the government's tenure. The upcoming interim Budget will reveal the government's stance on divestments.
Budget 2024: Modest divestment targets seen for FY25, medium term
The latest review of the divestment process is spurred by the delay in privatisation bids as the strategic sale process remains time-consuming, and many factors - including market conditions and litigation resorted to by stakeholders - are beyond the government's control, said another official.
'Less is more' IPOs helps primary market
If the capital raised through IPOs this year indicates a 'new normal', there could be an uptick in industrial credit demand, an area of interest for banks awaiting a recovery in commercial lending.
Disinvestment fetches over Rs 4.20 lakh cr in 10 years but target to be missed again in FY24
Big ticket privatisation plans such as that of Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI) and CONCOR are already on the backburner and analysts feel meaningful privatisation can happen only after April/May general elections.
FinMin to empanel merchant bankers, law firms for disinvestment via OFS, dribbling
To be eligible for empanelment in the A++ category, which is an OFS transaction size of more than Rs 2,000 crore, interested merchant bankers would be required to have completed at least one equity market transaction of the size of Rs 2,000 crore.
After IREDA listing, what next? DIPAM secy says no plan for LIC FPO at the moment
“There is no withdrawal of RFP for the IDBI Bank. It is under strategic disinvestment. One of the RFPs is for Asset Valuer, which was revised and very soon it will come again. We looked at it. We did not have sufficient bids so therefore, we have re-looked at it and I think possibly as soon as next week, you know, that again RFP will be out.”
Surplus CPSE dividend unlikely to offset disinvestment revenue shortfall in FY24
The Indian government may face a disinvestment shortfall in FY24 due to potential delays in the strategic sale of IDBI Bank, possibly spilling into FY25. While surplus dividends from Central Public Sector Enterprises (CPSEs) might not fully compensate for the anticipated shortfall, the government is considering revising its combined disinvestment and dividend target of Rs 94,000 crore.
Govt gets multiple preliminary bids for strategic sale of IMPCL: DIPAM
Currently, the Indian government holds a 98.11% stake in IMPCL, which is a prominent manufacturer of 656 classical ayurvedic, 332 unani, and 71 proprietary ayurvedic medicines, catering to a wide range of diseases. The company supplies ayurveda and unani medicines to all states under the National Ayush Mission (NAM) as well as 6,000 Jan Aushadhi Kendras centers.
Disinvestment Target: Can the government break the jinx?
In the past, the government has missed targets set for prior financial years, the most recent being the Rs 1.75 lakh crore target for FY22, which was revised downwards to Rs 78,000 crore in the revised estimates. The actual proceeds for FY22 were at a meagre Rs 14,638 crore, primarily owing to the disruptions caused by the Covid-19 pandemic.
No decision on strategic disinvestment of MMTC: Patel
The government has not taken any decision on strategic disinvestment of MMTC, Parliament was informed on Wednesday. The government currently holds 99.33 per cent stake in MMTC.
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