New Delhi: The proposed divestment of government’s 60.72% stake in the IBDI Bank is unlikely to happen this fiscal, as the government is set to push the divestment to the next fiscal year, two people with direct knowledge of the matter told Mint.
As a result of a delay in proposed divestments, the government is unlikely to meet its divestment target for the ongoing fiscal, which is set at ₹51,000 crore.
However, the government expects higher non-tax revenues, including higher dividends from the Reserve Bank of India (RBI) and public sector banks to offset any revenue shortfall and maintain the fiscal deficit target of 5.9% (of the GDP), despite not meeting the divestment target.
“The divestment of IDBI bank is unlikely to happen this fiscal. It is likely to be pushed to the next fiscal," said the first person mentioned above, who requested anonymity.
“We are unlikely to achieve the divestment target this year. However, we have offsetting positives in the non-tax revenues front, including higher dividends from RBI and likely higher dividends from banks," the person added.
The RBI had transferred ₹87,416 crore as dividend to the government for FY23. An equity dividend of about ₹13,800 crore was received by the government from the listed public-sector banks (PSBs) during FY23.
Interestingly, the government’s divestment target of ₹51,000 crore for FY24 is lower than the previous financial year. The estimates for FY23 had been revised to ₹50,000 crore from the earlier target of ₹65,000 crore.
Earlier, the government had aimed to issue financial bids for IDBI Bank by December 2023 and close the transaction during the fourth quarter of the current fiscal year.
Proceeds from the government’s stake sale in IDBI bank was expected to be over ₹15,000 crore. The financial due diligence process for the purpose had commenced during July.
“There is a delay (in the divestment process) but it’s not an unfair delay," said the second person, who spoke under the condition of anonymity.
The Finance Ministry didn’t respond to queries.
During FY24, the government had planned to sell its stake in IDBI Bank, Shipping Corporation of India, BEML and Container Corporation of India.
The government had last year shelved the strategic disinvestment of Bharat Petroleum Corp. Ltd, which was expected to bring in ₹50,000-60,000 crore. Plans to revive the divestment were not reinitiated after reviews. Cooling down of oil prices contributed to the decision.
During FY 23, the disinvestment of Central Electronics Ltd had also been scrapped after the selected bidder had failed to disclose its ongoing litigation in the National Company Law Appellate Tribunal (NCLAT).
Meanwhile, the government had earlier this year scrapped the strategic disinvestment of Pawan Hans Ltd, after it disqualified the successful bidder as it failed to disclose litigations of its consortium partners.
“The government’s goal of strategically divesting its stake in various public sector companies is an ongoing process," the first person mentioned above said.
“As far as divestment is concerned, many things have to be considered and looked into, like regulatory and due diligence processes, before decisions are taken," the person added.
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Updated: 20 Aug 2023, 07:16 PM IST
IDBI divestment to be pushed to next fiscal; divestment target unlikely to be met | Mint - Mint
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