Disinvestment of PSUs: A cushion to fiscal deficit

MUMBAI: The renewed efforts over disinvestment of PSUs, being driven by the newly elected Congress led UPA government is seen as a cushion to the rising fiscal deficit. A calculation based on government���s plan for disinvestment suggests that $ 94.77 billion could be raised under current market prices of list PSUs.

The President���s inaugural speech of the 15th Lok Sabha mentioned about her government���s plans to sell its stake in the listed PSUs maintaining its stake upto 51 per cent.

If the government materializes this plan, the total amount to be raised would be equal to about 9.48% of current GDP as against the current fiscal deficit, which is pegged at US$ 62.26 billion, about 6.23% of GDP. The current fiscal deficit is much lower than the amount that the government has the potential to garner by selling the stakes in listed PSUs, according to a study prepared by SMC Capital.

���Besides listed PSUs, as per the disinvestment policy, the government is planning IPOs of several unlisted PSUs as well such as NHPC, OIL, Coal India Limited, BSNL, RITES, IRCON International, etc.,��� said Jagannadham Thunuguntla, head ��� equity, SMC Capital.

���The Congress led government with the association of Left parties will find easier to pursue its disinvestment plans,��� added Thunuguntla.