Budget 2021: FM Sets The Disinvestment Target At Rs 1.5 Lakh Crore For FY-22

The budget has fixed the disinvestment goal for FY22 at Rs 1.75 lakh crore in the 2021-22 Budget Year. This will entail a decline in the Centre's involvement in two state-owned lenders and a general insurance firm as well as the selling of large scale assets. The proposed initial public offering (IPO) of the Life Insurance Corporation of India (LIC) and the privatization of Air India, Bharat Petroleum, Concor and Shipping Corp. will also be part of the divestment programme. In delivering the budget, finance minister Nirmala Sitharaman said that the government will implement constitutional changes to the reduction of holdings in two banks, one insurance firm and the IPO of LIC Ltd in the budget preparation session.

The centre has agreed to retain only four segments as 'strategic' wherein the government will have a role, Sitharaman also stated. Like all other sectors, all PSUs will be privatized across time. And it falls after the divestment preparations for the year are disrupted by a pandemic-hit 2020-21, dropping significantly short of the Rs 2.1 lakh crore goal. So far, Rs 20,000 crore has been raised in divestment revenue for the current year, all by market offerings and acquisitions. The privatization of Bharat Petroleum Corporation (BPCL), Air India, Container Corporation (Concor) and Shipping Corporation (SCI) and the mega IPO of Life Insurance Corporation of India, which was expected to take place this fiscal year, is anticipated to yield a huge bulk of revenues from 2021-22. The government has already called for expressions of benefit against BPCL, SCI and Air India. For BPCL, the expressions of interest have been filed by three gamers such as Vedanta Group, Apollo Global and I Squared Capital.

The LIC IPO, on the other side, is projected to occur only during the second half of the future fiscal year. For LIC, an accountant has already been designated by the government to measure the assessment and its associated selling price. With the exception of the 2017-18 and 2018-19 financial years, all governments in the last ten years have fallen by the wayside of divestment objectives. Although the government made decisions of Rs 1.05 lakh crore for 2019-20, it only attempted to accomplish 48% or Rs 50,304 crore for 2019-20. Mostly with the emerging fiscal deficit, as well, the government is expected to see enhanced divestment productivity in the near future.