While officials blame Covid-19 and the lockdowns for the department’s failure to push through the share sale programme, Dipam’s track record on asset monetisation and strategic sale is seen as reluctance on part of civil servants to push through a key element of the government’s agenda at a time when spending is projected to be higher due to the coronavirus pandemic and by all accounts tax revenues will be massively short of target.
In fact, during presentations to Prime Minister Narendra Modi a few weeks ago, there were suggestions that asset monetisation could help the government cover a part of the higher spending needed for providing another economic stimulus.
Given the weak oil prices and impact on oil companies, the prospects of concluding the BPCL strategic sale look dim during the current financial year and there is uncertainty over Air India too, since airlines globally are battling for survival. There has been little progress on Concor and Shipping Corporation, again dependent on trade, which have been hit hard by the pandemic. Despite assurances, officers are seen to be reluctant to push through privatisation and the so-called strategic sale has been limited to state-run players, such as ONGC and NTPC gobbling up smaller rivals in the public sector space.
The plan to sell off several loss-making companies has been a non-starter, but the government is unwilling to call them off either.
There are murmurs within the government over Dipam holding back on IPOs and follow-on public issues, despite a recovery in the stock markets due to abundant liquidity on the back of large stimulus packages in the West. Several banks have already tapped the market to raise funds.
In contrast, the process for LIC share sale has just started with the valuation exercise, which will be followed by the actual programme being worked out. The blockbuster sale will also require amendments to the LIC Act, and could prove to be a race against time if the government is hoping to raise a bulk of the Rs 90,000 crore that it has budgeted to mop up from state-run banks and financial institutions, including IDBI Bank.