New Delhi: A report on Wednesday claims that India could be selling stakes in a large mining entity and a bank with an objective of raising Rs 20,000 crores.
The Finance Ministry is yet to comment, however, anonymous officials have been quoted as saying in the Bloomberg report that a proposal to divest shares involving the two PSU entities was being examined.
The report identifies the two entities as Coal India and IDBI bank.
The report further adds that the transaction would be pursuant to market movements. While a better market-sentiment may fetch the government higher returns, a tepid movement would prompt a buyback of government stakes by the two entities.
In the case of Coal India, the government has been left with 66 percent stakes after a 10 percent sale in 2015. The coal agency has a market capitalization of Rs 80,944 crores (as on Thursday) and the previous divestment exercise helped the country mop-up Rs 2,255 crores.
In the case of IDBI bank, LIC, the national insurer was roped in to help it solve financial turmoil. LIC owns 51 percent stake in IDBI bank, of which the government owns a 47% stake.
The economic repercussions of Covid-19 may have prompted the government to consider such a move. Divestment exercises and stake sales are a way of raising money for the country that has seen itself rank third on total Covid cases. On Wednesday, India, with more than 7.4 lakh total Covid cases, officially pipped Russia to the third slot.
In 2020, the government had plans of divesting Air India, Bharat Petroleum Corporation Limited, as well as Life Insurance Corporation of India. Post Covid, slipping GDP forecasts, lower tax collections, drop in GST revenues and fears of downgrades by Sovereign rating agencies have kept the finance ministry on tenterhooks.