Union Budget Focus on Disinvestment and Asset Monetisation
The Union Budget this year prominently highlights its reliance on disinvestment and asset monetisation to achieve financial goals.
Budgetary Projections
- Projected to raise ₹80,000 crore under miscellaneous capital receipts for 2026-27.
- Significant increase from ₹33,837 crore for 2025-26 and ₹17,202 crore for 2024-25.
- Success depends on effective planning, market conditions, and management of institutional constraints.
Challenges in Achieving Targets
- Historical difficulty in meeting disinvestment targets.
- 2025-26 receipts revised down from ₹47,000 crore to lower estimates.
Disinvestment and Monetisation Efforts
- Focus on market-based transactions in previous years.
- Successful transactions:
- Mazagon Dock Shipbuilders Ltd, Bank of Maharashtra, Indian Overseas Bank: ₹7,717 crore.
- Specified Undertaking of the Unit Trust of India remittances: ₹1,051 crore.
- Infrastructure investment trusts: ₹18,837 crore.
- Slow progress in strategic disinvestment due to legal and procedural issues; 13 out of 36 CPSE transactions completed since 2016.
Fiscal Context and Importance
The fiscal strategy is crucial to manage the central government’s debt-to-GDP ratio, targeted to reduce from 56.1% to 55.6%, with a long-term goal of reaching 50% by March 2031.
- Continued focus on capital expenditure to bolster economic growth.
- Disinvestment receipts are vital for maintaining higher capital expenditure and fiscal consolidation.
Strategic Recommendations
- Reducing government stakes in 78 listed CPSEs could unlock value worth approximately ₹10 trillion.
- Consider listing unlisted CPSEs for additional value realisation.
- Revise the strategic disinvestment policy outlined in the 2021-22 Budget.
- Minimise government's presence in strategic sectors, privatise or close non-strategic CPSEs.
Implementation and Market Impact
- Effective implementation can raise resources and enhance market sentiment.
- Challenges include articulating a clear roadmap and overcoming political opposition.
- The target of ₹80,000 crore for 2026-27 tests policy execution and market readiness.
