The government has lined up big plans for its strategic disinvestment programme in the current fiscal. Sources tell CNBC-TV18 the government is proposing to sell its entire stake in five top CPSEs, namely BPCL, Container Corporation, Shipping Corporation of India, THDC & NEEPCO. The proposal includes selling government stake of 75 percent in THDC to NTPC, while 100 percent government stake is proposed to be sold to NHPC.
The Government holds 53.29 percent equity in BPCL, 54.79 percent in Container Corporation, 63.75 percent in Shipping Corporation. The Centre’s shareholding is 75 percent in THDC while 25 percent is with the Uttarakhand government. NEEPCO is 100 percent government-owned.
Sources say the government will now initiate the formal process of seeking approvals from the Cabinet, for each of these proposed strategic stake sales. Before going to Cabinet, an extensive inter-ministerial consultation will be undertaken for each of the stake sales.
Post the cabinet nod, the government will start the valuation exercise for each of the companies, appoint consultants and merchant bankers and also invite bids for the strategic stake sales of BPCL, Container Corporation, Shipping Corporation, while NTPC and NHPC will be involved in the process of merging THDC and NEEPCO respectively with their own businesses, along with of course, the critical task of valuation of the unlisted companies.
The final nod for each of the stake sales will come from the Finance Minister Sitharaman headed Alternate Mechanism or the group of Ministers on disinvestment which will approve the bid price and the actual transaction.
Finance Minister Sitharaman in her July 5 Budget speech said, “Strategic disinvestment of select CPSEs would continue to remain a priority of this government. In view of current macro-economic parameters, the government would not only reinitiate the process of strategic disinvestment of Air India but would offer more CPSEs for strategic participation by the private sector.”
She also said, “Government is setting an enhanced target of Rs 1,05,000 crore of disinvestment receipts for the financial year 2019-20. The Government will undertake a strategic sale of PSUs. The Government will also continue to do consolidation of PSUs in the non-financial space as well.”
The need to pace up strategic sales has probably arisen, as the government is struggling to meet its tax collections amidst a slowdown in the economy.
This disinvestment becomes all the more crucial as earlier this month, Sitharaman cut corporate tax resulting in an estimated revenue loss of nearly Rs 80,000 crore which could result in missing the fiscal deficit target of 3.3 percent this year.
Sitharaman had announced that the government proposed to cut corporate tax rates to 22 percent for domestic companies provided they will not avail exemptions or incentives and 15 percent for new domestic manufacturing enterprises as part of a raft of measures to boost economic growth.
Moreover, government expects a total tax collection shortfall to the tune of Rs 1.8 lakh crore in the current fiscal
on poor economic situation. Sources in the government told CNBC-TV18, Rs 1.2 lakh crore shortfall might occur on the direct taxation front while the remaining shortfall of Rs 60,000 crore was expected from indirect taxes.
The overall direct tax collections target, as pegged in budget FY20 is Rs 13.35 lakh crore.