That the Narendra Modi government is wasting no time divesting a minor portion of its shareholding in ONGC, Coal India and the hydro power giant NHPC is welcome. It is also divesting five per cent stake in the steel major Sail. They are all very good companies and, even though there may be some weaknesses in some of them, the Modi government is sure to rectify them. But there is no doubt about their quality and potential.
The stock markets are at their peak and should continue to be on the upswing unless unforeseen global events surface to destabilise the markets in the coming weeks. The merchant bankers, too, should take their assignments as a challenge. The added attraction for potential retail investors is the attractive pricing of shares at a five per cent discount to the market determined price at the time of the share offers.
The government hopes to garner Rs 43,200 crore from the sale of these blue-chip PSUs, but even if it mops up a little less through the offer-of-sale route in the secondary market, it would be substantial enough to help it meet its challenging fiscal deficit target of 4.1 per cent of GDP by March 2015.
The Manmohan Singh government had been able to mop up a mere Rs 16,027 crore, way below its target of Rs 40,000 crore. Union finance minister Arun Jaitley has set a disinvestmet target of Rs 58,425 crore in his Budget for this fiscal. There is no reason why he should not achieve this goal.
