Disinvestment facing many challenges: Govt

• The Finance Ministry, which last month pared the disinvestment target for 2023-24 to a nine-year low of ₹51,000 crore, has now publicly acknowledged the multiple challenges it is facing in privatising public sector enterprises (PSEs) and raising funds through minority stake sales, a drive that has stalled since Air India’s sale.

Key obstacles

• The COVID-19 pandemic impacted transactions in 2020 and 2021.
• The Ukraine conflict last year hurt minority as well as strategic stakesales.
• Strategic disinvestment transactions have to deal with matters such as
  • Resolving land title,
  • Lease and land use issues with State government authorities,
  • Disposal of non-core assets,
  • Excess manpower and labour unions,
  • Protection of process and functionaries etc.

‘Frequent use of ETFs’

• Between 2016-17 and 2019-20, the government had raised almost ₹99,000 crore from ETFs with underlying shares of CPSEs.
• Disinvestment receipts so far this year amount to just ₹35,282 crore, against a Budget target of ₹65,000 crore and revised estimates of ₹50,000 crore.
• The privatisation of Central Electronics and Pawan Hans had to be scrapped after being announced, owing to legal concerns about the winning bidders.
• The sole strategic sale completed in FY23 is of Neelachal Ispat Nigam Ltd. (NINL) to a Tata group firm.

Prelims Take Away

• Disinvestment
• PSE
• Categories of PSE