News Brief

India's Divestment Struggles Continue As Government Falls Short Of Targeted Proceeds For Fifth Consecutive Year: Report

Nayan DwivediNov 24, 2023, 03:52 PM | Updated 03:52 PM IST
The government is expected to fall significantly short of its overall divestment target.

The government is expected to fall significantly short of its overall divestment target.


In a challenging turn of events, India is expected to struggle in achieving even half of its targeted proceeds from the planned sales of state-run firms this fiscal year, marking the fifth consecutive year of falling short of divestment goals.

Sources reveal that the government might miss its divestment target by 300 billion rupees ($3.60 billion) for the fiscal year 2023/24, with New Delhi originally aiming for 510 billion rupees from divestment proceeds, reported Moneycontrol.

The setback is attributed to delays in the divestment plans of IDBI Bank and state-owned NMDC Steel, which were anticipated to contribute around 300 billion rupees to the divestment target.

Delays in the vetting process for potential buyers of IDBI by the Reserve Bank of India have extended the sale timeline beyond the upcoming 2024 federal elections.


While smaller divestments may still be achievable within the current fiscal year, the government is expected to fall significantly short of its overall divestment target.

Former federal finance secretary, Subhash Chandra Garg, expressed skepticism about the government's commitment to privatisation policies in the near term, stating, "No privatisation will take place in this tenure of the government. Forget divestment and privatisation for the next six months because of a lack of political interest in privatisation policy."

Although the government has generated Rs 80 billion through stake sales so far this year, a portion of the divestment target shortfall is expected to be offset by higher dividends paid by state-run firms.

Despite the challenges in divestment plans, the government remains confident in meeting its fiscal deficit target of 5.9 per cent of GDP, reassuring that the privatisation delays will not impact this crucial fiscal goal.

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