As the familiar ghost of a missed asset sell target in India’s fiscal banquet threatens to reappear this fiscal year, Bharat Petroleum Corp Ltd sales are looking dicey as the year increasingly draws to a close. As reported in the reports, bidders for this state-run company have not been able to find partners and arrange funds, even awaiting the approval of the lender, for which the government hopes. It was supposed to be one of its three big coffers—goods in 2021. To help achieve the disinvestment target of -22 1.75 trillion. Now, with less than a quarter left and financial bids not even invited, the sale may need to go ahead. If so, he can leave a 60,000 crore hole in our budget math, which will be burdened by a tax buoyancy with the task of filling it to keep the fiscal deficit for the year at 6.8% of GDP. Tata-bound Air India and public offer-headed Life Insurance Corp of India (LIC) are the other two equity offloads that the Center is relying on. So far, it has grown 9,329 crore, or about 5% of its plan. In a year of business recovery, rising valuations and a big revenue revival, it’s moving at a remarkably slow pace. After all, no administration before has been so open in its stance on privatization, a word that does not fall short of refreshing.
With the Air India deal in the bag at the centre, all eyes are on the upcoming LIC offer right now. The country’s largest insurer will not be privatized, but its coverage, financial numbers and how much it will be valued by mass investors, with early estimates suggesting that even a tenth of the shares put up for grabs could be overwhelming. 1 trillion. If this mega-sale goes through, our performance on a major policy force won’t be too disappointing. Still, leaving it for early 2022 could cut it too close. Investors are waiting for clarity in its issue prospectus as to what value can be achieved, a valuation that should factor into how its profits will be shared with LIC policy holders, who get some of its surplus. The longer this all takes, the greater its exposure to risk of changing market mood as global capital settings begin to change. It would be very unfortunate if the Centre’s efforts to give up ownership of enterprises should not have been owned, missing the global capital growth driven by a great Covid easing of credit.
While the Center has chalked out a bold outline of its equity-shedding plan, with sectors marked for wide-ranging stake retention or disinvestment of various degrees, failures on its actual score have regularly hit our budgets. Last year, it fell short of its 2.1 trillion target by 1.78 trillion. Even pre-Covid, it has achieved its target only twice in six years starting from 2014-15, when the current Bharatiya Janata Party (BJP) took power. Previous administrations were concerned about India’s policy on large-scale privatization, particularly the previous Congress-led government, with its Left leanings and residual attachment to an external public sector, back on a Nehruvian mandate whose Time had passed. For a long part of our economic liberalization story, analysts viewed asset sales as a question of state resolution. However, the BJP was not expected to waver on this agenda, let alone succumb to similar shades of inertia. Perhaps a tax-intake bounty could help offset the financial loss of a missed target this year. But if this recurring ghost is to be banished for good, we need to be realistic—and plan better.
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