The sluggish market situation notwithstanding, Finance Minister P Chidambaram on Thursday clarified to ministry officials he wouldn't accept any slippage in the government's Budget divestment target of Rs 30,000 crore (Rs 300 billion) for this financial year.
In a meeting on the possibility of exploring the exchange-traded funds route for divestment, attended by Economic Affairs Secretary Arvind Mayaram, Divestment Secretary Mohammad Haleem Khan and other officials concerned, Chidambaram reviewed the road map prepared by the Department of Divestment (DoD) for 2012-13.
A senior ministry official who attended the meeting said the finance minister was emphatic. "The target has to be achieved," Chidambaram said. The official added the finance minister also reviewed the situation in companies that were in the pipeline for divestment this year.
So far this financial year, the government has failed to open the divestment account. Rashtriya Ispat Nigam's initial public offering (IPO) has already been put off twice.
DoD now expects the divestment process would kick off from September, and it has a list of companies in the pipeline. In July, the Cabinet had cleared divestment in SAIL [ Get Quote ]. About half a dozen other companies, including BHEL, NMDC and OIL, are in the government's list.
Besides IPOs and follow-on public offerings, the government is also exploring the possibility of a second round of divestment in ONGC [ Get Quote ], this time through the auction route. In March, the government had sold stake in ONGC.
The exchange-traded funds route is also being considered. This would allow the government to pool shares of companies in which it wants to sell stake, to create a fund.
This would then be divided into smaller units, which would be listed on stock exchanges. This route would ensure greater retail participation and check volatility in the shares of public sector undertakings.
The ministry official said at today's meeting, no decision was taken on any particular mode for divestment. He added DoD would try to ensure the divestment target would be met in the remaining period of this financial year.
The divestment target for the previous financial year was Rs 40,000 crore (Rs 400 billion). To make it more realistic and achievable, it was cut to Rs 30,000 crore (Rs 300 billion) for this financial year.