• Government of India is likely to set a conservative target for the amount that can be raised through disinvestment of state enterprises in FY2024
Analysts said the Indian government may set a conservative target for the amount it can raise through disinvestment of state enterprises in fiscal 2024.
"We pencil in disinvestment receipts of INR 350 billion ($4.30 billion) in 2022/23... For 2023/24, we factor in disinvestment of INR 500 billion," Kotak Institutional Equities said in a note.
The Government of India has set a disinvestment target of 650 billion rupees for 2022/23.
The brokerage believes that the government will look to raise funds by selling more stake in Life Insurance Corporation of India, Shipping Corporation of India and exit from holding of specified undertaking of UTI, which is an investment vehicle that holds shares of listed and unlisted entities which was earlier held by the failed Unit Trust. of India.
Kotak also pointed out that outright privatization would be difficult before the general elections.
Nomura also expects a more conservative target of 500 billion rupees in disinvestment proceeds next year.
"The process of disinvestment and privatization continues to be delayed, resulting in an increasing burden on the fiscal accounts," Morgan Stanley said. It expects the government to budget just 350 billion rupees in receipts from share sales in public enterprises this year.
Economists at Bank of Baroda wrote in a note that in the past only eight out of 32 have the government met or exceeded its disinvestment target.
"Clarity on disinvestment is very important to give a clear signal to the market," said economists who have pegged the disinvestment target at Rs 400-500 billion this year.
Disinvestment receipts add to the state's non-tax revenue, and strong inflows from this category could help the government quickly close its budget gap. The government is expected to target a fiscal deficit of 5.8% of GDP for 2023/24, Reuters reported last week.
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