Union Budget Eyes Rs 40000 Crore From Stake Sales In FY11 (26-Feb-2010)
India expects stake sales in state firms in order to garner Rs 40,000 crore ($8.6 billion) in the fiscal year 2010-11 and the targeted amount was announced by the Finance Minister Pranab Mukherjee today, while presenting the Union Budget for the fiscal year 2010-11.
Currently, in order to offload the holdings in 60 state-run firms over the next few years, the government is implementing an ambitious plan, a move that aimed at raising funds for the welfare programmes.
India raised funds about $1.8 billion from sale of stake in government firms Oil India and NHPC in 2009, and has offloaded stakes in NTPC and firm Rural Electrification Corp for about $2 billion this year.
Meanwhile, the government is expected to raise around $3 billion from a sale in miner NMDC in March.
Meanwhile, Sonam Udasi, vice president at BRICS Securities said that a target of Rs 25,000 crore had been set by the government for this fiscal, which it has more than delivered, and so the estimate it has given for the next year is very reasonable.
The sale of NTPC was just covered on the final day after LIC and SBI stepped in to buy shares in the absence of strong foreign-investor interest, which was on account of the market downturn and a controversial French auction book-building system.
But the sale in REC, that closed on Tuesday, was subscribed more than three times, thus helping to raise around $760 million.
The sale of stake in Steel Authority of India, Hindustan Coppe, Coal India and telecoms firm BSNL are expected in 2010/11.
While presenting the Budget for 2009-10, the finance minster said that "I invited people to participate in Government''s disinvestment programme to share in the wealth and prosperity of the Central Public Sector Undertakings.
Since then, ownership has been broad based in Oil India Limited, NHPC, NTPC and Rural Electrification Corporation while the process is on for National Mineral Development Corporation and Satluj Jal Vidyut Nigam. The Government will raise about Rs.25,000 crore during the current year. Through this process, I propose to raise a higher amount during the year 2010-11. The proceeds will be utilised to meet the capital expenditure requirements of social sector schemes for creating new assets.
Listing of Central Public Sector Undertakings improves corporate governance, besides unlocking the value for all stakeholders-the government, the company and the shareholders. Market capitalization of five companies which have been listed since October, 2004 has increased by 3.8 times from the book value of Rs.78,841 crore to Rs.2,98,929 crore".
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