|FM Jaitley arriving the Parliament House to table Union Budget
Easing the stressed legacy accounts of banks, Jaitley earmarked Rs. 10,000 crore...
for recapitalisation of banks in 2017-18 and assured need based additional allocation.
Stating that the disinvestment policy announced in the last budget will continue, Jaitley further said that the government will put in place a revised mechanism and procedure to ensure time bound listing of identified CPSEs on stock exchanges. This will foster greater public accountability and unlock the true value of these companies, he added.
Giving some hint about government’s strategy vis-à-vis sick PSUs, Jaitley said the CPSEs will be integrated across the value chain of an industry through consolidation, mergers and acquisitions. “By these methods it will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders, he added. Possibilities of such restructuring are visible in the oil and gas sector.”
Outlining its policy on oil majors, the government also proposes to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies.
The Finance Minister said that the Exchange Trade Fund (ETF), comprising shares of ten CPSEs, has received overwhelming response in the recent Further Fund Offering (FFO).
The government will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18, he added.
Jaitley said that the focus on resolution of stressed legacy accounts of banks will continue and the legal framework has been strengthened to facilitate resolution, through the enactment of the Insolvency and Bankruptcy Code and the amendments to the SARFAESI and Debt Recovery Tribunal Acts. In line with the ‘Indradhanush’ roadmap, an amount of Rs. 10,000 crore is provided for recapitalisation of Banks in 2017-18 and additional allocation will be provided, as may be required, he added.
Government said it will raise Rs 72,500 crore through disinvestment of PSUs, including listing of three railway PSUs IRCTC, IRFC and IRCON, and proposed merger and consolidation to create globally competitive public sector units. Finance Minister Arun Jaitley said the government will put in place a revised mechanism and procedure to ensure time-bound listing of identified CPSEs on stock exchanges as listing will foster greater public accountability and unlock their true value.
“The shares of Railway public sector enterprises (PSEs) like IRCTC, IRFC and IRCON will be listed stock exchanges,” Jaitley said in his 2017-18 Budget speech. As per the documents, the government proposes to raise Rs 72,500 crore through disinvestment in CPSEs in 2017-18, which is higher than the Rs 45,500 crore raised in the current fiscal as per revised estimate (RE).
Fiscal 2016-17 is the seventh year in a row when the government would not be meeting the disinvestment target fixed in the Budget. As much as Rs 56,500 crore was budgeted to be raised through PSU disinvestment in 2016-17. Jaitley said there are opportunities to strengthen CPSEs through “consolidation, mergers and acquisitions” so that they can be integrated across the value chain of an industry.
“It will give them capacity to bear higher risk, avail economies of scale, take higher investment decisions and create more value for stakeholders. Possibilities of such restructuring are visible in the oil and gas sector. “We propose to create an integrated public sector oil major which will be able to match the performance of international and domestic private sector oil and gas companies,” the Finance Minister said. Jaitley said exchange traded fund (ETF) comprising shares of 10 CPSEs has received overwhelming response. The government had raised Rs 6,000 crore through the second tranche of CPSE ETF last month.
“We will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other government holding will be launched in 2017-18,” he said.
Budget highlights for PSUs
Railway PSUs like IRCON, IRCTC to be listed on markets
Rs. 10,000 crore for recapitalisation of banks; Need based additional allocation assured
Airport Authority Act to be amended to monetise airport land
Airport Operation Management for tier-II airports via PPP
All service taxes for bookings via IRCTC to be withdrawn
NABARD to set up dedicated micro-irrigation fund to be set to achieve Per Drop More Crop mission
Corpus of NABARD's long-term irrigation fund raised to Rs 40,000 crore
Consolidation, mergers and acquisitions of CPSEs to be encouraged, an integrated public sector ‘oil major’ soon