Centre's FY17 stake sales were Rs 46,247 cr

The Narendra Modi government divested equity for Rs 46,247 crore in state-owned entities in 2016-17.

This is more than the Union Budget's revised estimate for the year of Rs 45,500 crore, though well below the original estimate of Rs 56,500 crore. And, the highest ever from stake sales for any year. The target for 2017-18 is Rs 72,500 crore.

Data from the department of investment and public asset management (Dipam) show of the Rs 46,247 crore for the year, nearly Rs 19,000 crore or 41 per cent came from share buybacks by seven public sector units. Namely, National Aluminium, Coal India, NMDC, MOIL, Bharat Electronics (BEL), NHPC and Nevyeli Lignite.

While buyback is not stake sale in the accurate sense, it is still divestment; the Centre offloads part of its stake back to the PSu concerned. In July last year, Dipam issued guidelines for state-owned companies that state every PSU with a net worth of at least Rs 2,000 crore and cash and bank balances of Rs 1,000 crore must exercise the option of share buyback. It also has guidelines for dividends and bonuses to the shareholders -- principally, the government itself.

The normal offer-for sale (OFS) on the stock exchanges -- for NHPC, Hindustan Copper, NBCC, MOIL and BEL -- fetched the exchequer Rs 7,475 crore. The OFS for employees in six companies fetched nearly Rs 530 crore. "This is the highest ever that employees have paid to buy stake in their own PSUs. This shows the Centre has been able to involve employees in the process of stake sale and made them own a part of their company," said a Dipam official.

The Centre also garnered Rs 8,500 crore by offloading two tranches of its Central Public Sector Enterprises (CPSE) exchange-traded fund, launched in March 2014. An ETF is a security that tracks an index, a commodity or a basket of assets like an index fund but trades like a stock on an exchange. The advantage is that it provides diversification to investors and is cheaper than investing in a fund.

Constituent entities of this ETF are Coal India, Oil and Natural Gas Corporation, GAIL, Rural Electrification Corporation, Power Finance Corporation, Container Corporation, Indian Oil, Oil India, BEL and Engineers India. The Centre plans a second CPSE ETF this year.

From the Centre's stake in Axis Bank, Larsen & Toubro and ITC and other entities through Specified Undertaking of Unit Trust of India, it raised Rs 10,800 crore, by selling its shares in L&T and ITC.