PM Modi Revs Up Divestment Drive With Rs 24,000 Crore Stake Sale in Coal India
The Narendra Modi government revived its disinvestment drive on Wednesday by announcing up to 10 per cent stake sale in the state-run Coal India. This was decided at a Cabinet meet on Wednesday.
The stake sale will happen through an auction on the stock exchanges on Friday and could fetch the government Rs 24,000 crore at current market prices. The timing is being seen as good with the markets on a high.
One-fifth or 20 per cent of the Coal India share sale has been reserved for retail investors, who will additionally get a 5 per cent discount to the bid price. A retail investor means an individual who places bids for shares of total value not more than Rs 2 lakh.
The government, which owns close to 90 per cent of the coal miner, is selling 31.58 crore shares with an option to sell another 31.58 crore shares.
The stake sale is part of a government plan to raise Rs 58,425 crore this fiscal - of which two months are now left - through share sales in public sector units and other firms.
The assets sale is the centrepiece of the government's Budget promise of narrowing the fiscal deficit to 4.1 per cent of GDP in the current fiscal year.
So far in this fiscal, the government has just raised nearly Rs 1,700 crore through 5 per cent share sale in steel-maker SAIL, and its fundraising target relies heavily on Coal India and Oil and Natural Gas Corp (ONGC), in which it has been trying to sell a stake of 5 per cent.
Oil Minister Dharmendra Pradhan on Wednesday said that the share sale in ONGC is scheduled for this fiscal though falling crude prices pose a challenge. The proposed 5 per cent stake sale in ONGC could fetch the government nearly Rs 15,000 crore at current prices.
The sales have been stalled by opposition from labour unions, plunging oil prices and questions over ONGC's share of fuel subsidies. This has forced the eight-month-old Modi administration to seek different options, including alternative asset sales and deeper spending cuts.