Budget 2024: Government Sets Rs 50,000 Crore Divestment Target For FY25 Amid Fiscal Realignment

The Indian government has set a divestment target of ₹50,000 crore for the fiscal year 2024-25 (FY25) to boost its fiscal coffers and drive economic growth. This target marks a 67% increase from the revised aim of Rs 30,000 crore for the current fiscal year ending on March 31.

The government's divestment plans faced challenges in the current fiscal year, as it managed to raise only about Rs 12,500 crore through asset sales as of January 3. This shortfall has cast doubts on meeting the revised divestment target for FY24. Despite this, the government remains optimistic, with higher non-tax revenues expected to offset the deficit from disinvestments.

In the Union budget for FY24, the government had initially aimed to raise Rs 51,000 crore from the sale of its stakes in various public sector companies. However, the actual proceeds fell short, prompting a downward revision of the fiscal deficit target to 5.8% of the gross domestic product (GDP), down from the previous target of 5.9%.

One key contributor to the fiscal cushion is the anticipation of increased dividends from state-owned firms. In the interim budget for FY25 presented recently, the government raised its expectations of dividends from state-owned firms to Rs 50,000 crore in FY24, up from the budget estimates of Rs 43,000 crore. As of February 1, the government has already collected Rs 44,060 crore in dividends from public sector enterprises.

Furthermore, the government projects a substantial dividend of Rs 1.02 trillion from the Reserve Bank of India (RBI) and state-owned banks in FY25. It also expects Rs 48,000 crore in dividends from state-owned companies for the next fiscal year.

While the government seeks to boost revenue through divestment, several strategic disinvestments are currently in various stages. These include IDBI Bank Ltd, BEML Ltd, Shipping Corp. of India Ltd, HLL Lifecare Ltd, Projects & Development India Ltd, and Indian Medicines Pharmaceutical Corp. Ltd, and Ferro Scrap Nigam Ltd. However, progress on most of these fronts is yet to be made, and some disinvestments may spill over into the next fiscal year.

Container Corp of India Ltd remains a potential candidate for divestment, as the government is yet to seek expressions of interest. However, there are no plans to restart the disinvestment process of Bharat Petroleum Corp Ltd.

Looking ahead to FY25, Rashtriya Ispat Nigam Ltd (RINL) and certain subsidiaries under AI Assets Holding Ltd are identified as potential candidates for divestment. As the government navigates its divestment strategy, it aims not only to meet its financial targets but also to drive economic growth and enhance the efficiency of public sector enterprises.