The current National Democratic Alliance government accounts for 58% of all disinvestments since 1991, The Hindu reported on Monday, citing data released by the Department of Investment and Public Asset Management. This is reportedly almost twice the disinvestments that took place during the United Progressive Alliance’s two terms in power.
According to the data, disinvestments worth Rs 3.63 lakh crore have taken place since 1991. Of this, government assets worth Rs 2.1 lakh crore were disinvested in the last four years. In this year’s Union Budget, the government set a disinvestment target of Rs 80,000 crore for the 2018-’19 financial year. Of this, it has divested assets worth Rs 15,247.11 crore till date. If it meets its target, the NDA government’s share in total disinvestment since 1991 will go up to nearly 65%.
“The government needs all the revenue it can get to meet its fiscal deficit target,” an unidentified economist working with the government told the newspaper. “Most of the disinvestment needs to take place. These are loss-making companies. But the manner in which it is getting the disinvestment proceeds in some cases is problematic. Take the ONGC-HPCL deal, where ONGC bought some Rs 36,000 worth of HPCL shares from the government. How is that disinvestment, if ONGC is a government-owned company itself?”
In January, the Oil and Natural Gas Corporation acquired the Centre’s entire 51.11% equity stake in Hindustan Petroleum Corporation Limited. ONGC was reportedly forced to buy HPCL’s stake for Rs 36,915 crore at a price 14% higher than the petroleum company’s closing share price on January 31.
The government is also reportedly considering a proposal to order public sector oil companies to buy back shares from the government. This will help the government earn between Rs 10,000 crore and Rs 20,000 crore. In March, reports said the state-owned Indian Oil Corporation and Bharat Petroleum Corporation Limited may buy 26% stake each in GAIL, giving the government another Rs 20,000 crore.
Former Chief Statistician Pronab Sen said disinvestment means the government is reducing its holdings directly or indirectly. “What they [government] are doing is they are retaining control over the PSUs, but they are bringing down the value of the PSUs,” he told The Hindu. “What you are doing is you are finding ways of transferring capital from the companies to the government coffer over and above the dividends you are getting from those companies.”