Taxes from disinvestment help government receipts balloon
In one day, the centre has raised Rs 4,500 crore by participating in a shares buyback offer of Hindustan Aeronautics Ltd (HAL) and Bharat Dynamics Ltd (BDL). The Government has also raised Rs 980 crore through the taxes it generated in these two disinvestment transactions.
Key facts:
Overall, in this financial year
the Government has raised a total of Rs 25,000 crore.
Including taxes, the
Government has raised the highest amount garnered through disinvestment in a
single year since 1991. In 2014-15, the Centre had raised Rs 24,348.71 crore,
the maximum in a single year through disinvestment.
Way ahead:
In 2016-17 the Government plans
to participate in more offers of shares buybacks of central public sector
units. In the Union Budget, a disinvestment target of Rs 56,500 crore has been set
for the year. Of this, Rs 36,000 crore is to be raised from sales of minority
stakes in PSUs. The remaining Rs 20,500 crore is projected to come from
strategic sales in both profit and loss-making enterprises.
Disinvestments in India:
Disinvestment has become an
important source of raising resource for the Government.The policy of
‘disinvestment’ in CPSEs has evolved over the years. Disinvestment of
government equity in CPSEs began in 1991-92 following the Industrial Policy
Statement of 1991, which stated that the Government would divest part of its
holdings in select CPSEs.
Objective:
The main objective of
disinvestment is to put national resources and assets to optimal use and in
particular to unleash the productive potential inherent in our public sector
enterprises.
Current Policy on Disinvestment:
The current Government policy
on disinvestment envisages people’s ownership of CPSEs while ensuring that the
Government equity does not fall below 51% and Government retains management
control. Keeping this objective in view of disinvestment policy, the Government
has adopted the following approach to disinvestment:
Department of Disinvestment:
The Department of Disinvestment
was set up on December 10, 1999, with the responsibility to deal with all
matters relating to disinvestment of Central Government equity in Central
Public Sector Undertakings. This department now works under the Ministry of Finance.
National Investment Fund:
In 2005, the government formed
a National Investment Fund or NIF, to which the proceeds of disinvestment were
channeled. The mandate of the Fund, managed by professional investment
managers, was to utilise 75% of annual funds in social sector schemes to
promote education, health and employment. But with the economic slowdown of
2008-09, and later a drought, this was waived for three years — and later, in
2013, restructured to provide flexibility in using the Fund.
It was decided that the NIF
would be utilized for the following purposes:
- Subscribing to the shares being issued by the CPSE including PSBs and Public Sector Insurance Companies, on rights basis so as to ensure 51% ownership of the Government in those CPSEs/PSBs/Insurance Companies, is not diluted.
- Preferential allotment of shares of the CPSE to promoters as per SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 so that Government shareholding does not go down below 51% in all cases where the CPSE is going to raise fresh equity to meet its Capex programme.
- Recapitalization of public sector banks and public sector insurance companies.
- Investment by Government in RRBs/IIFCL/NABARD/Exim Bank.
- Equity infusion in various Metro projects.
- Investment in Bhartiya Nabhikiya Vidyut Nigam Limited and Uranium Corporation of India Ltd.
- Investment in Indian Railways towards capital expenditure.
