Union Budget 2019: Government sets ₹1,05,000 crore disinvestment target, revive Air India sale plan

• The government set a target to raise ₹1,05,000 crore by selling stakes in public sector companies
  
• Will look at consolidation of non-finance PSUs, says FM
  
• Will revive plans to sell stake in Air India.
  

The government set a target to raise ₹1,05,000 crore by selling stakes in public sector companies, the Finance Minister Nirmala Sitharaman said.

The government will also revive the plan to divest stake in loss-making Air India.

“We will look at bringing private participation in more central public sector enterprises. We will also look at consolidation in public sector, in the non-finance sectors as well,” she said.

This move has been predicted by many experts who have been pushing for strategic asset monetisation which has been delayed in the last term of Narendra Modi. This time, with the current state of fiscal deficit at 5.8% in 2018-19, there are few excuses to delay it.

Many new and innovative financial instruments have been launched in the last five years, and there have been successful in making money from brownfield assets which are basically established or 'built' assets.

"India has had a reasonable success in brownfield asset monetisation and several InvITs (investment trusts)t and one REIT transaction have already been completed. Additionally, NHAI carried out one toll project transaction as well. The cumulative resources garnered through these instruments and model exceed 24,000 crore," she said.

Divestment is the best way for the government to make money, and also offload its stake in companies. As CEO of NITI Aayog Amitabh Kant says, that the government is sitting on a lot of assets which can use new owners and bring in efficiencies into the system.

This will solve the problem of government having to bail out large troubled companies. On the top of the list are BSNL with highest expected losses of ₹ 138.04 billion for the year. Air India and MTNL too occupy second and third spots amongst most expected losses.

The debt of these companies has been making it tough for them to function along with many policies that stifle their growth. Most of them including BSNL and Air India scramble for money to pay salaries every month.

The country is also expected to divest stakes in at least three brownfield assets, with no liabilities. However, the proposal to divest stakes could be expedited by the government.

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