The disinvestment programme has used an array of tools from listing, minority sales to offer-for-sales to raise much-needed cash for the government and unlock value in public sector enterprises. In the period between 1991-92 and 2000-01, the government was able to raise only a little over Rs 20,000 crore against a target of Rs 54,000 crore, according to stock exchange data.
Several factors were cited for such a low realisation, including unfavourable market conditions, the government’s unwillingness to cede much control, and opposition from trade unions. This period was marked largely by minority stake sales, which were propped up by financial institutions at home. The period between 2001-02 and 2003-04 can be termed as the golden period for disinvestment when the then NDA government pushed a number of big-ticket transactions, including strategic sales.
In 2003, the government sold 25% in the then Maruti Udyog, firing up the market. Since then, there have been years when the government has missed its disinvestment target due to lethargy to push sales, choppy market conditions, among other factors.
There have been blockbuster sales as well such as the Coal India IPO in November 2010. It was one of the biggest listings, raising Rs 15,200 crore. The shares were listed at around Rs 288 and soon soared to Rs 340 during trading. Since then, the government has listed several state-run firms.
The market is now eagerly awaiting another blockbuster IPO, which is LIC. The government hopes to raise Rs 90,000 crore from this. “The government should not be worried about choppy markets. There should be listing of PSUs at regular intervals,” said Pranav Haldea, MD at Prime Database.