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Union Budget FY 2019-20 : Divestment target increased
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The budget for FY19 by the FM also placed emphasis on disinvestment of CPSEs (Central Public Sector Enterprises), in order to raise revenue from non-tax sources, given the modest growth in revenues from taxes. The target is set to INR 1.05 lakh cr, higher than the target of INR 90,000 cr proposed during the interim budget while considering going below an appropriate level of 51%, where government control is still to be retained, on a case to case basis. 

The strategic sale of such companies will help the company to meet its fiscal deficit target of 3.3% and it has already received approval for 24 of the CPSEs (total 257) such as Bharat Pumps, Hindustan Prefab, Hindustan Newsprint, Hindustan Fluorocarbons, etc. With direct sales of the PSUs moving at a slower pace, the FM highlighted on taking the Exchange Traded Fund (ETF) route which worked well for selling off the govt stake. Central Public Sector Enterprises Exchange Traded Fund (CPSE ETF) was launched in March 2014 and tracks 11 shares CPSEs -- ONGC, NTPC, Coal India, IOC, Rural Electrification Corp, Power Finance Corp, Bharat Electronics, Oil India, NBCC India, NLC India and SJVN. The government had till March 2019 raised Rs. 285 bn over four rounds since its launch, and had launched the fifth tranche to raise about Rs. 35 bn. The initial NFO saw ~98% individual retail investment in 2014. 
 
Till FY19, the govt achieved success by implementing 2 ETFs as a part of its disinvestment program – namely the CPSE ETF and the Bharat 22 ETF. The budget also focused on encouraging participating in the CPSEs which would facilitate increased investment into the PSEs. The government’s most favored target among its PSEs is likely to be Air India for a strategic disinvestment for which it had offered 74% stake in the last fiscal. The FM highlighted that it would consider retaining govt stake below 51% in some PSEs from case to case basis. It is expected that the govt. might look to disinvest more than 51% of its stake in Air India allowing the strategic buyer to gain a controlling stake.  
 

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