Ministries tell PM markets’ state not ripe for divestment
4 Dec 2013 12:09 AM GMT
'Bhel, Coal India have been asked to come back with various options. These options are buyback, dividend payments, disinvestment,' Finance Minister P Chidambaram said after high-level meeting convened by Singh on disinvestment.
'Ministry of Heavy Industries, Coal Ministry (has been asked) to work out best option for raising proceeds as alternative to disinvestment. The money has to be raised through these options,' he said. The government has budgeted to raise Rs 40,000 crore from minority stake sale in public sector units (PSUs) in the current fiscal. With eight months of the fiscal over, it has managed to garner only over Rs 1,325 crore through stake sale in six PSUs.
According to a top government functionary, it was a review meeting wherein disinvestment plan for PSUs including Bhel and CIL was discussed. 'Their (all ministries) view was that the current market conditions are not favourable,' the official said, adding, there are no plans of disinvestment in CIL and Bhel as of now.
After the meeting, Coal Minister Shriprakash Jaiswal said 'discussions are underway (disinvestment of Coal India) and no decision was taken.'
The stake sale of Coal India has been hanging fire for long on account of opposition from the trade unions. Besides, Bhel disinvestment is also facing roadblocks of unfavourable market conditions as the company's share price has taken a beating since its disinvestment was approved in 2011. The government had originally planned to divest 10 per cent in CIL, but on account of stiff opposition from unions, it lowered it to 5 per cent or 31.58 crore shares. At the current market price of Rs 274.30 apiece, CIL stake sale could fetch over Rs 8,600 crore.
The government currently holds 90 per cent stake in CIL. Besides, by selling 5 per cent stake or 8.28 crore Bhel shares at the current market price of Rs 158.40, the exchequer could reap in over Rs 1,300 crore.
In addition to disinvestment, the government is also looking at selling residual stake in Hindustan Zinc Ltd (HZL) and Balco. The government, which currently holds 29.5 per cent stake in HZL and 49 per cent stake in Balco, is looking at exiting from the two firms in which Anil Agarwal-led Vedanta Group holds majority stake. The government had sold controlling stake in these companies between 2001-2003. The stake sale is top on agenda of the government, which has also budgeted to raise Rs 14,000 crore by way of residual stake sales in the current fiscal.
Achieving the disinvestment target is critical to keep the government finances on track. Chidambaram has already said the government will not breach the 4.8 per cent of GDP red line drawn for fiscal deficit in this financial year.
FDI inflows drop 38% in Sept, 11% in first half
New Delhi: Foreign direct investment (FDI) into the country declined by about 38 per cent, year-on-year, to $2.91 billion in September, according to the Department of Industrial Policy and Promotion. In September 2012, the country had attracted foreign investment worth $4.67 billion.
During the April-September period of 2013-14 fiscal, FDI has thus dipped by 11 per cent to $11.37 billion, from $12.84 billion in the first half of 2012-13, DIPP said. Decline in FDI in sectors like services, telecom and metallurgical industries have lowered the inflows.
From April-September this fiscal, FDI in services, telecom and metallurgical industries declined to $1.32 billion, $32 million and $240 million respectively.
In the first six months of last fiscal, services had attracted $3.04 billion, telecom($43 million) and Metallurgical industries ($685 million).
However, according to various estimates, the recent steps announced by the government are expected to improve the investment climate in the country and push up FDI inflows. It has relaxed FDI policy in 12 sectors, including telecom, tea and petroleum & natural gas.
'Ministry of Heavy Industries, Coal Ministry (has been asked) to work out best option for raising proceeds as alternative to disinvestment. The money has to be raised through these options,' he said. The government has budgeted to raise Rs 40,000 crore from minority stake sale in public sector units (PSUs) in the current fiscal. With eight months of the fiscal over, it has managed to garner only over Rs 1,325 crore through stake sale in six PSUs.
According to a top government functionary, it was a review meeting wherein disinvestment plan for PSUs including Bhel and CIL was discussed. 'Their (all ministries) view was that the current market conditions are not favourable,' the official said, adding, there are no plans of disinvestment in CIL and Bhel as of now.
After the meeting, Coal Minister Shriprakash Jaiswal said 'discussions are underway (disinvestment of Coal India) and no decision was taken.'
The stake sale of Coal India has been hanging fire for long on account of opposition from the trade unions. Besides, Bhel disinvestment is also facing roadblocks of unfavourable market conditions as the company's share price has taken a beating since its disinvestment was approved in 2011. The government had originally planned to divest 10 per cent in CIL, but on account of stiff opposition from unions, it lowered it to 5 per cent or 31.58 crore shares. At the current market price of Rs 274.30 apiece, CIL stake sale could fetch over Rs 8,600 crore.
The government currently holds 90 per cent stake in CIL. Besides, by selling 5 per cent stake or 8.28 crore Bhel shares at the current market price of Rs 158.40, the exchequer could reap in over Rs 1,300 crore.
In addition to disinvestment, the government is also looking at selling residual stake in Hindustan Zinc Ltd (HZL) and Balco. The government, which currently holds 29.5 per cent stake in HZL and 49 per cent stake in Balco, is looking at exiting from the two firms in which Anil Agarwal-led Vedanta Group holds majority stake. The government had sold controlling stake in these companies between 2001-2003. The stake sale is top on agenda of the government, which has also budgeted to raise Rs 14,000 crore by way of residual stake sales in the current fiscal.
Achieving the disinvestment target is critical to keep the government finances on track. Chidambaram has already said the government will not breach the 4.8 per cent of GDP red line drawn for fiscal deficit in this financial year.
FDI inflows drop 38% in Sept, 11% in first half
New Delhi: Foreign direct investment (FDI) into the country declined by about 38 per cent, year-on-year, to $2.91 billion in September, according to the Department of Industrial Policy and Promotion. In September 2012, the country had attracted foreign investment worth $4.67 billion.
During the April-September period of 2013-14 fiscal, FDI has thus dipped by 11 per cent to $11.37 billion, from $12.84 billion in the first half of 2012-13, DIPP said. Decline in FDI in sectors like services, telecom and metallurgical industries have lowered the inflows.
From April-September this fiscal, FDI in services, telecom and metallurgical industries declined to $1.32 billion, $32 million and $240 million respectively.
In the first six months of last fiscal, services had attracted $3.04 billion, telecom($43 million) and Metallurgical industries ($685 million).
However, according to various estimates, the recent steps announced by the government are expected to improve the investment climate in the country and push up FDI inflows. It has relaxed FDI policy in 12 sectors, including telecom, tea and petroleum & natural gas.
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