Amid differences between FinMin and Dipam over target, stage set for big bang divestment

NEW DELHI: The massive shortfall in the Rs 2.1-lakh-crore disinvestment target has triggered unease within the government. The department for investment and public asset management (Dipam) is blaming the department of financial services for imposing an additional Rs 90,000-crore target through the sale of the Centre's stakes in LIC and IDBI Bank, which may not realise this year.

Dipam, the government's disinvestment manager, believes that it was responsible only to achieve a target of Rs 1.2 lakh crore and blames Covid for the shortfall. This is not the first time that Dipam is accusing the finance ministry of using it to show higher receipts and consequently a lower fiscal deficit.

But it will be the sixth year in a row when the Narendra Modi government may not have much to write about when it comes to strategic sales, barring the transfer of shares in PSUs such as HPCL and Tehri Hydro Development Corporation (THDCL) to other state-run entities.

Dipam officials, however, said that things will change in 2021 with the stage set for the government's strategic sales in the new year. They are hoping that amendments to the LIC Act, paving the way for an IPO, will come through in the Budget session.

The groundwork has been done to at least ensure that big ticket sales like those of state-run oil marketing firm BPCL, cash-guzzling Air India, logistics firm Concor, Shipping Corporation and BEML go through smoothly in 2021. This will ensure much-needed cash for the government at a time when it wants to step up spending to get growth back on track.

The Modi administration has been unsuccessful in pushing the privatisation agenda due to political obstacles and lacklustre response to some of its earlier sale plans. But officials say now the signal from the political leadership is amply clear and Dipam has been asked to go ahead full steam.

The Centre has reiterated its resolve to stand by civil servants who are reluctant to take decisions that may be questioned many years after they have retired. Legislative changes and government assurances will help accelerate decision-making, particularly those linked to strategic disinvestments.

Most experts expect the proceeds from disinvestment to be robust as the economy recovers from the impact of the pandemic.