The proposal to sell the building to state-owned Jawaharlal Nehru Port Trust also comes after the government's efforts of Air India strategic disinvestment failed to take off.
Divestment in BPCL, SCI, Concor, NEEPCO, and THDC would help the Centre keep its fiscal deficit in check in the wake of subdued tax revenues and a Rs 1.45-trillion hit for the exchequer from corporation rate cuts.
The government on Monday signed the share purchase agreement with Tata Sons for the sale of national carrier Air India for Rs 18,000 crore. Earlier this month, the government had accepted an offer by Talace Pvt Ltd, a unit of the holding company of the salt-to-software conglomerate, to pay Rs 2,700 crore cash and take over Rs 15,300 crore of the airline's debt. Following that, on October 11 a Letter of Intenet (LoI) was issued to the Tata Group confirming the government's willingness to sell its 100 per cent stake in the airline.
The government's disinvestment programme is set to get a boost this Diwali, with the finance ministry planning to hit the market to sell a five per cent stake in Steel Authority of India Ltd (SAIL) by October.
According to PRIME Database, there are nine companies with active buyback programmes of Rs 8,605 crore. Among these, Infosys's share repurchase programme is the biggest at Rs 8,260 crore.
The share of public sector undertakings (PSUs) in the total market capitalisation of listed companies--at an all-time low of 10 per cent currently --- may get a leg-up from the government's divestment push. Recently the government announced the successful sale of national carrier Air India to Tata Sons, India's first privatisation of a PSU since 2002-03. The transaction is expected to be completed by December.
India's economic growth is likely to reach pre-COVID-19 levels by the end of the 2021-22 fiscal as the GDP contraction in this financial year is expected to be less than 8 per cent, Niti Aayog vice chairman Rajiv Kumar said on Sunday. The Reserve Bank of India (RBI) has also revised its forecast of economic growth for the current fiscal year (2020-21) to (-)7.5 per cent as against its earlier forecast of (-)9.5 per cent.
The decision assumes significance following the enthusiastic response from retail investors in the Friday's stake sale in steel major SAIL, which fetched the government Rs 1,715 crore (Rs 17.15 billion).
An analysis of the frequency of various watchwords in the finance minister's Budget speech shows that he was perhaps trying to hold on to his ideas without treading on anybody else's toes, says A K Bhattacharya.
The government's aim is to ensure it gets to its Rs 40,000-crore (Rs 400-billion) target from disinvestment proceeds before the end of 2010-11.
The Department of Disinvestment in the Finance Ministry will hire an advertising or public relation agency for the purpose.
Fitch Ratings has cut India's economic growth forecast to 8.7 per cent for the current fiscal but raised GDP growth projection for FY23 to 10 per cent, saying the second COVID-19 wave delayed rather than derail the economic recovery. In its APAC Sovereign Credit Overview, Fitch Ratings said India's 'BBB-/Negative' sovereign rating "balances a still-strong medium-term growth outlook and external resilience from solid foreign- reserve buffers, against high public debt, a weak financial sector and some lagging structural factors". The 'Negative' outlook, it said, reflects uncertainty over the debt trajectory following the sharp deterioration in India's public finances due to the pandemic shock.
After the April-July fiscal deficit data was released on August 31, several analysts hinted that the government may need to go for cuts in capital expenditure to meet the fiscal deficit target.
A host of companies have been lined up by the disinvestment department as candidates for stake sale.
The government on Wednesday permitted NRIs to invest up to 100 per cent stake in disinvestment-bound Air India. The decision comes at a time when the government has sought preliminary bids for 100 per cent stake sale in the national carrier. "Today's decision on Air India is one milestone decision where NRIs... will get permission to invest 100 per cent in the airline," Union Minister Prakash Javadekar told reporters at a briefing about the Union Cabinet's decision.
Strategic sales are tricky and were last undertaken when the Vajpayee government was in power.
Aiming to raise Rs 40,000 crore (Rs 100 billion) from disinvestment, the government on Wednesday said it will sell its stake in 10 more PSUs, including IndianOil, MMTC, Coal India Ltd, SAIL, RINL and Shipping Corporation, in the current financial year.
Amendments would be required in the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 for privatisation, sources said.
Jhunjhunwala, one of India's well-known individual investors, was speaking at the India Economic Conclave organised by the Times Network. He said he won't rule out 5-10 times gains in state-owned banks over the next five years. Shares of PSBs have been on a tear this year. The Nifty PSB index is up 20 per cent so far this year.
There are several welcome standalone reforms, but these do not add up to a coherent strategy to achieve a $5 trillion economy or secure Aatmanirbharta, observes Rathin Roy.
The disinvestment-bound carrier, which is incurring Rs 15 crore loss per day, has huge dues towards oil companies and Airports Authority of India, among others.
As the Tata group inches closer to taking over Air India in January 2022, the $242-billion conglomerate will also inherit a stake in Kerala's Cochin airport. The Tatas would become the only airline to have an operational stake in a major Indian airport. The airport is a strategic hub connecting India to Middle East nations - home to the largest share of Indian migrant workers. In addition to Air India and Air India Express, private carrier Indigo also uses Cochin to ferry the lucrative 'Malayali Gulf traffic' to multiple locations like Jeddah, Riyadh, Sharjah, Dubai, Abu Dhabi, Doha, Kuwait and Bahrain, among others. According to regulatory filings, Air India has a three per cent stake in Cochin International Airport.
The Union Cabinet had last week decided to disinvest 10 per cent of its holding in the world's largest coal producer.
Following the two-tranche disinvestment, the government and the company would get Rs 8,000 crore (Rs 80 billion) each, Home Minister P Chidambaram told reporters after a meeting of the Cabinet Committee on Economic Affairs.
The Department of Investment and Public Asset Management (Dipam) has asked ministries, government departments, and public sector undertakings (PSUs) to send a list of assets that can be monetised under the proposed National Monetisation Pipeline. The list will be used for creation of an asset monetisation dashboard, which will keep a track of such assets. The government, meanwhile, has asked CRISIL to prepare a road map for monetising assets of PSUs and government departments.
"Financial bids for Air India disinvestment received by Transaction Adviser. Process now moves to concluding stage," DIPAM Secretary Tuhin Kanta Pandey tweeted.
'Market feels this Budget will promote all-round growth and that is what is giving it confidence.'
The Department of Disinvestment, which is the nodal department for carrying out PSU stake sale, will finalise the cabinet note after appointment of asset management companies to handle PSU ETF.
The Centre's outgo on major subsidies was up 49 per cent to about Rs 1.42 lakh crore (Rs 1.42 trillion) in the first half of the fiscal against Rs 95,190 crore (Rs 951.9 billion) in the same period last year.
For next fiscal, the minority stake sale target has been kept at Rs 36,000 crore.
The collection from borrowings and other liabilities will be 20 paise, while income tax will yield 17 paise to every rupee collection.
As many as 10 merchant bankers, including ICICI Securities and SBI Cap, had evinced interest in managing the stake sale.
The government's disinvestment programme made a muted re-start with the Cabinet Committee on Economic Affairs approving the part-sale of its stake in two power companies -- NTPC and Satluj Jal Vidyut Nigam -- but postponing a decision on the overall disinvestment policy.
The Department of Disinvestment will soon appoint merchant bankers to manage 10 per cent stake sale in Engineers India which may fetch Rs 520 crore to the exchequer.
Encouraged by response of foreign investors to PSU stake sale, the government is proposing to raise the disinvestment target to Rs 40,000 crore in the next financial year by selling equity in 20 companies.
'We would advise investors to invest in a disciplined way in equities for the long term.'
The company has already received the coal ministry's nod to reduce the face value of its shares to Rs 10 from Rs 1,000 at present.
The government has merged the Department of Public Enterprises (DPE) with the finance ministry to give it a better control over state-owned firms and facilitate its ambitious privatisation programme. Finance ministry will now have six departments while DPE's hereto parent ministry, the ministry of heavy industries and public enterprises will now be called the ministry of heavy industries. Previously, the disinvestment ministry - created under the Atal Bihari Vajpayee government - was merged with the finance ministry and is now a department under it. Also, Foreign Investment Promotion Board (FIPB) was abolished and administration of foreign investments was given to the finance ministry (FinMin).
Centre might move swiftly on its next round of strategic sales in CPSEs
The commerce ministry has consented to 10 per cent disinvestment in MMTC that can fetch the government Rs 17,000 crore (Rs 170 billion)at present valuation.
