Govt likely to sell 11% stake in IRFC by FY24 as part of disinvestment plan

Senior officials say govt plans to bring own shareholding down to 75%;

The government, as part of its disinvestment drive, is planning to sell 11 per cent of its stake in Indian Railway Finance Corporation (IRFC) over the current and the next financial year.

The ministry of railways currently owns 86.36 per cent stake in the public-listed financing arm of the Indian Railways. A senior official said the intent is to bring the government’s stake down to 75 per cent by 2023-24 (FY24).

However, the structure of the proposed stake sale or the number of offers planned is yet to be worked upon. Last week, the finance ministry launched an offer for sale (OFS) to sell five per cent of its stake in the sole ticketing arm of Indian Railways — Indian Rail Catering and Tourism Corporation (IRCTC).

The financing arm of the Indian Railways has been a crucial pillar for the national transporter over the years as it undertakes an infrastructure overhaul. The company provided more than Rs 1 trillion in finances to the railways in 2020-21, and Rs 60,000 crore in 2021-22.

While its mandate is to provide Rs 66,500 crore of low-cost funds for the national transporter, executives and officials said that this amount might see an increase given the aggressive spending by the railways ministry.

As of October, the ministry has already utilised 93 per cent of the Rs 1.37 trillion budgetary allocation it received for the financial year. According to the supplementary demand for grants made by the ministry at the ongoing winter session of Parliament, the government has sought Rs 12,000 crore more for this fiscal year.

The company was created in 1986 to boost extra budgetary resources (EBR) for infrastructure development of the railways, as higher government budgetary allocation has a negative impact on the fiscal deficit. Over the last three years, the company’s assets under management have grown to Rs 4.15 trillion from Rs 2.66 trillion.

Business Standard had previously reported that IRFC has also shown interest in offering domestic green bonds, but is inclined to first assess the market’s appetite as the Centre also plans to issue green bonds worth Rs 16,000 crore in the second quarter.