India government must set moderate divestment targets -official (updated)

Container of India

18/10/2022 13:56

(Adds details)
    By Nikunj  Rajesh Ohri
       NEW DELHI, Oct 18 (Reuters) - The Indian government
should focus on privatisation of state-run companies instead of
chasing high divestment targets, a top finance ministry official
said on Tuesday, pointing to market volatility and investors'
shaky appetite for risk.
    Last fiscal year, the government raised just over 135
billion rupees ($1.6 billion) from the sale of stakes in
state-owned firms, a fraction of its target of 1.75 trillion
rupees  and missing its divestment goal for a third straight
year.
    "We should actually have moderate targets and more focus
should be on privatising," Tuhin Kanta Pandey, secretary in the
Department of Investment and Public Asset Management, told
Reuters in an interview.
    The Indian government has set a 650 billion rupee ($7.89
billion) divestment and privatisation target for 2022/23, out of
which it raised 245.44 billion rupees in the first seven months
of the fiscal year.
    High targets lead to a perception that the government will
sell minority stakes in state-run companies, prompting a fall in
share prices of such firms, Pandey said. 
    Finance Minister Nirmala Sitharaman last year announced
plans to privatise all state-run companies barring a few in
strategic sectors such as defence and telecommunications.
    Pandey said the government was at an advanced stage for
inviting initial bids for privatisation of state-owned logistics
firm Container Corp of India  CCRI.NS  and two former
subsidiaries of Air India.
    The sale of a majority stake in IDBI Bank  IDBI.NS  is
likely to be completed in the next fiscal year that starts April
1, 2023, he said.
    "Closure of IDBI Bank transaction will depend on response
from interested bidders and time taken for due diligence."
    Earlier this month, India invited initial bids to sell a
60.72% stake in IDBI Bank.
    ($1 = 82.3450 Indian rupees)
 (Reporting by Nikunj Rajesh Ohri; Editing by Kirsten Donovan
and Emelia Sithole-Matarise)
 ((Aftab.Ahmed@thomsonreuters.com; +91 99109 33884; Reuters
Messaging: twitter: @aftabahmed00))