Budget 2024-25: Divestment, dividend targets for FY25 likely to be retained

Budget Expectations: The government is unlikely to alter, in the full budget, its revenue mop-up target of close to ₹1 lakh crore for FY25 from disinvestment & asset monetisation, and dividends from non-financial central public sector enterprises (CPSEs), senior officials said.

In a rare move, the interim budget in February clubbed the government's disinvestment and asset monetisation targets under the 'miscellaneous capital receipts' head, instead of declaring them separately. The combined realisation for this fiscal was pegged at ₹50,000 crore, against the curtailed FY24 revised estimate of ₹30,000 crore.

Another ₹48,000 crore was to come as dividend from the non-financial CPSEs and entities in which the government holds minority stakes.


While actual dividend collections beat initial estimates for a third straight year through FY24 and analysts expect another good year for CPSEs, the government may not raise this target from the interim budget level, one of the officials told ET.

"The idea is not to present estimates that will fall short of actual realisations and upset resource allocation plans," he said. However, a final call, especially on the precise asset monetisation target, will be taken closer to the budget, which will be presented on July 23. The government's disinvestment proceeds totalled ₹16,507 crore and asset monetisation fetched around ₹16,000 crore, beating the combined revised target of ₹30,000 crore for FY24.

Dividend collections from the CPSEs and other entities also rose to a fresh peak of ₹63,749 crore in FY24, according to the Department of Investment and Public Asset Management (DIPAM) data. The FY24 dividend revenue was about 27.5% higher than the revised estimate of ₹50,000 crore, suggesting strong performance by state-run firms across sectors.

As for this fiscal, the government has raked in ₹4,918 crore in such dividends so far. It now expects to conclude the privatisation of IDBI Bank and divest stake in Shipping Corporation of India and NMDC Steel, among others, in FY25. This will help it boost its divestment revenue.

In a report, analysts at CareEdge Ratings said: "With a bumper dividend from the RBI (₹2.11 lakh crore), the central government's fiscal position remains comfortable, which may limit the urgency to push hard on divestments". As such, the combined divestment and asset monetisation target accounts for just 1.6% of the government's budgeted non-debt receipts for FY25. It signals the government's diminishing reliance on such revenue to finance its fiscal deficit.

The CareEdge analysts have, however, estimated a huge disinvestment potential of about ₹11.5 lakh crore at current market capitalisation, assuming the government maintains at least a 51% stake in public firms and offloads excess shares.

DIPAM secretary Tuhin Kanta Pandey had earlier told ET that setting a high annual disinvestment target would potentially create an "overhang in the market" and could be detrimental to the value creation strategy of the CPSEs concerned. So, the government would follow a "calibrated disinvestment strategy", he said.