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Updated January 7th, 2024 at 10:22 IST

India's fiscal 2024-25 divestment target may hit nine-year low: Report

The sale of IDBI Bank, anticipated to inject over Rs 20,000 crore into government funds, faces delays due to regulatory procedures.

Reported by: Business Desk
Fiscal 2024-25 divestment target
Fiscal 2024-25 divestment target | Image:Unsplash
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FY 24-25 divestment target: The government of India is contemplating a divestment target for the fiscal year 2024/25 that could be the lowest in nine years, as the government shifts its attention to upcoming general elections, news agency Reuters reported quoting a senior official.

The official, who did not disclose an exact figure, cited uncertainties around regulatory hurdles, particularly the completion of 'fit and proper' vetting for the sale of a majority stake in IDBI Bank. The lower target would mark a significant drop from this year's goal of Rs 51,000 crore and the lowest since fiscal 2013/14.

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The sale of IDBI Bank, anticipated to inject over Rs 20,000 crore into government funds, faces delays due to regulatory procedures, potentially impacting the divestment plan. With elections on the horizon, the government's focus may shift away from privatisation initiatives, as administrations typically exercise caution ahead of polls to avoid opposition challenges.

Despite the government's aim to divest state-run firms across various sectors, tangible success has been limited. The divestment target has been met only twice in the last decade, prompting a reassessment of policy and a potential shift towards more professional execution of divestment exercises.

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Analysts suggest that recent substantial dividend payouts, coupled with the profitability of public sector companies and heightened investor interest, could influence the government's strategic approach. India foresees dividend payouts from state-run firms exceeding government expectations for the current fiscal year.

(With Reuters inputs.)

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Published January 5th, 2024 at 17:17 IST

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