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| 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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