Friday, February 2, 2018

Budget highlights: Govt sets disinvestment target of Rs 80000 crore for 2018-19; FCI will be reconstructed; 24 CPSEs to be divested

Finance Minister Jaitley before budget presentation 
PRESENTING a pro-poor, and pro-farmer budget, ahead of crucial Parliamentary polls next year, Finance Minister Arun Jaitley on February 1 outlined few steps for the public sector undertakings (PSUs) as well. Touching upon government’s divesment target, the Finance Minister announced that the disinvestment target...
of Rs.72500 crore for the 2017-18 fiscal has been exceeded and expected receipts of Rs.100,000 crore.
He set disinvestment target of Rs.80000 crore for 2018-19. Three public sector insurance companies, namely, National Insurance Co. Ltd., United India Assurance Co. Ltd., and Oriental India insurance Co. Ltd, will be merged into a single insurance entity.
PSU banks
The Government has initiated efforts to generate funds as well as undertake banking sector reforms. While presenting the General Budget 2018-19 in Parliament, he said that the Government has initiated the process of strategic disinvestment in 24 CPSEs including strategic privatization of Air India. 
Exchange Traded Fund
Highlighting the government’s effort to generate funds, the Finance Minister said that the Exchange Traded Fund Bharat-22 which was introduced to raise Rs. 14,500 Crore, was oversubscribed in all segments. Similarly, the 2017-18 Budget Estimates for disinvestment were pegged at the highest ever level of Rs.72,500 Crore and the estimated receipts from the same are expected to the tune of Rs.1,00,000 crore in 2017-18, far exceeding the target. 
Disinvestment target 
The Finance Minister has also set the disinvestment target of Rs.80,000 crore for 2018-19. In his Budget speech, the Finance Minister said that bank recapitalization programme has been launched with bonds of Rs.80,000 crore being issued this year. This recapitalization will pave the way for the PSU banks to lend additional credit of Rs.5 lakh crore. It is proposed to allow strong Regional Rural Banks to raise capital from the market to enable them to increase their credit to rural economy.
NHB Act to be amended
National Housing Bank Act is being amended to transfer its equity from the Reserve Bank of India (RBI) to the Government. Indian Post Offices Act, Provident Fund Act and National Saving Certificate Act are being amalgamated and certain additional people friendly measures are being introduced. To provide the Reserve Bank of India an instrument to manage excess liquidity, Reserve Bank of India Act is being amended to institutionalize an Uncollateralized Deposit Facility. Securities and Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act 1956, and Depositories Act 1996, are being amended to streamline adjudication procedures and to provide for penalties for certain infractions.
FCI to be reconstructed 
Further, capital of the Food Corporation of India (FCI) will be restructured to enhance equity and to raise long-term debt for meeting its standing working capital requirement. Budgeting of Government of India’s contribution in equity and debt of the metro ventures floated by the State Governments will also be streamlined, the Finance Minister stated.
PSU Listing 
The Government has approved listing of 14 Central Public Sector Enterprises (CPSEs), including two insurance companies, on the stock exchanges. Jaitely said that the process of acquisition of Hindustan Petroleum Corporation (HPCL) by the ONGC has been successfully completed. 
Three public sector general insurance companies National Insurance Company Ltd, United India Assurance Company Limited and Oriental India Insurance Company Limited will be merged into a single insurance entity and will be subsequently listed.
Monetisation of PSU assets
The Finance Minister said the Government would initiate monetizing select CPSE assets using InvITs from next year. He said Reserve Bank of India has issued guidelines to nudge Corporates access bond market. SEBI will also consider mandating, beginning with large Corporates, to meet about one-fourth of their financing needs from the bond market. 

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