Divestment target for FY25 may be lower with no new lofty plan

The Centre could further moderate its divestment target for 2024-25 (FY25), as it does not expect large receipts from asset sales — except some ongoing strategic ones, including IDBI Bank, which could spill over into next financial year.


Also, it may drastically reduce its FY24 divestment target of Rs 51,000 crore.

“We are still evaluating the Budget estimates for FY25.

“New big-ticket asset sales are unlikely.

“The focus will be on completing the ongoing deals,” said a government source privy to the discussion.


Global uncertainties had impacted investor sentiment, affecting previous timelines set for the completion of deals, said the source.

The divestment target in the Budget Estimate (BE) for FY25 could be 15-20 per cent lower than FY24 BE, depending on the evaluation of the asset sales already in progress.

The Centre could even halve its FY24 BE target of Rs 51,000 crore. If so, this will be a fourth time that the government will miss its divestment target.

According to data from the Department of Investment and Public Asset Management (DIPAM), the government has so far managed to garner Rs 8,000 crore through sale of assets.

Unlike many other strategic deals that would spill over into next financial year, the initial public offering (IPO) to sell a 25 per cent stake in the Indian Renewable Energy Development Agency (Ireda) is expected to come by the end of the current financial year.

Besides, the Centre is also optimistic about dividends from public-sector undertakings (PSUs), which it hopes will surpass its estimate of Rs 43,000 crore in the Budget for FY24.

The only year in the recent past when the government has met its divestment target has been 2018-19. It realised Rs 84,972 crore during that year, against the BE of Rs 80,000 crore.

In 2019-20, the actual collections were Rs 50,299 crore, which was half the BE for the year.

During the pandemic years — 2020-21 and 2021-22 — the receipts were significantly lower than BE.

The proceeds in 2022-23 were mainly driven by Life Insurance Corporation (LIC) of India, whose IPO fetched the Centre Rs 35,293 crore.

The overall collections were still about Rs 15,000 crore short of the revised estimate for that financial year.

According to experts, the slow progress in asset sales is not a concern for the government, as receipts from tax and non-tax revenue are providing sufficient cushion to meet the fiscal deficit target.

Also, no new strategic sale has been approved in recent times.

With some states going to the polls this year and the Lok Sabha elections set to take place next summer, experts do not see this as the best time for politically sensitive moves.

The proposed IDBI Bank stake sale, which is expected to work as the template for future bank divestments, had received initial bids eight months ago.

But it is yet to get the Reserve Bank of India’s “fit and proper” clearance on shortlisted bidders.

DIPAM, which handles the government’s privatisation policy, has explained the delay as part of the vetting process critical for sensitive sectors like banking.

BEML Limited and Shipping Corporation of India, on the other hand, are stuck as land assets have to be demerged from the core divestment activity.

On Concor, the railway ministry is apprehensive about the impact on logistics prices.

The Bharat Petroleum Corporation Ltd (BPCL) stake sale was called off due to a muted response at the expression of interest stage.

And in the case of Pawan Hans and Central Electronics, the winning bidder was disqualified pending litigation.

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