Union Budget 2019: Disinvestment target hiked to Rs 1.05L cr, PSU consolidation set to continue

Kolkata: Modi government in its second term has set an enhanced target of Rs 1,05,000 crore of disinvestment receipts for the financial year 2019-20. The Centre will undertake the strategic sale of PSUs and will also continue to do consolidation of PSUs in the non-financial space as well, union finance minister Nirmala Sitharaman said while tabling the union budget in the parliament on Friday.

“The government will also continue to do consolidation of PSUs in the non-financial space as well. ETFs have been proved to be an important investment opportunity for retail investors and have turned out to be a good instrument for the government of India’s divestment programme. To expand this further, the government will offer an investment option in ETFs on the lines of the Equity Linked Savings Scheme (ELSS). This would also encourage long term investment in CPSEs,” she said.

Interestingly, the Centre has been following the policy of disinvestment in non-financial public sector undertakings maintaining government stake not to go below 51 per cent.

The Centre is considering, in case where the government undertaking is still to be retained in government control, to go below 51 per cent to an appropriate level on a case-to-case basis. The Centre has also decided to modify the present policy of retaining 51 per cent government stake to retaining 51 per cent stake inclusive of the stake of government-controlled institutions.

Meanwhile, Amar Ambani, president & research head, YES securities, said, “High disinvestment target of Rs 1.05 lakh crore and increase in public shareholding to squeeze liquidity from the secondary market. The big surcharge tax on the high-income group and possible liquidity squeezing of secondary market liquidity due to disinvestment and increased public shareholding is causing the stock market to fall today.”