The government will not defer plans to sell stakes in public sector undertakings (PSUs), required to bridge its yawning fiscal deficit, despite a poor response to two of its recent sales, a finance ministry official said. Thegovernment has raised Rs 12,740 crore via divestment in PSUs since May 2009.
Government has outlined share sales to cut its fiscal deficit that is running at a 16-year high, but lacklustre response to the Rural Electrification Corp and the NTPC issues have raised doubts whether thegovernment can get good valuations if it presses ahead with its current sales schedule. Finance Minister Pranab Mukherjee said that the fiscal deficit would fall to 5.5% of GDP in current fiscal.
“No, there is no question of postponing scheduled stake sales in public sector companies which are in line for disinvestment,” said Sidhartha Pradhan, a joint secretary in the ministry who is in charge of stake sales.
A $754.4-million share sale in Rural Electrification Corp was barely subscribed by Monday, a day before the issue closed. The wan appetite was preceded by a similar reaction to a $1.8 billion share sale in NTPC.
Analysts have said the response to the REC offering would be a litmus test for the government’s plans to offload stakes.
The share sale plans include those in state-run miner NMDC, expected to raise $3 billion by end-March, Steel Authority of India Ltd, Hindustan Copper, power producer Satluj Jal Vidyut Nigam Ltd, Coal India and telecoms firm BSNL.