RBI’s mega dividend may limit big ticket divestment

Shipping Corporation sales to be completed will make it easy for government on the FY25 target

MUMBAI: The record Rs2.1 lakh crore dividend payout by the Reserve Bank of India will limit the need for big-ticket divestment, a domestic rating agency said on Thursday.

Care Ratings said the new government will retain the interim budget’s Rs50,000 crore target on receipts from divestments.

“With a bumper dividend from the RBI, the central government’s fiscal position remains comfortable, which may limit the urgency to push ahead with big-ticket divestments,” it said.

If there is a shortfall in the resource accretion, the government will prefer asset monetisation, it added.

Shipping Corporation of India (SCI) sales expected to be completed during the year will make it easy sailing for the government on the FY25 target, the agency said.

“After the demerger of land assets of the Shipping Corporation of India (SCI), its possible divestment looks likely in FY25, provided favourable market conditions prevail. If the government offloads its entire stake in SCI, it could generate Rs 12,500-22,500 crore as divestment proceeds,” according to the report.

The other plausible candidates include CONCOR and Pawan Hans, the rating agency said, adding that they continue to be on the slow burner.

In the last ten years, the government has raised Rs 5.2 lakh crore from the divestment initiatives.

According to the report, the government can raise Rs 11.5 lakh crore by selling stakes in state-owned companies without getting the stake below 51 per cent.

Selling stakes in central public sector enterprises can contribute Rs 5 lakh crore, while the remaining Rs6.5 lakh crore can come from stake sales in insurance firms and banks, it said.

The government may not opt to divest all its potential, and the decision to divest these listed firms may be influenced by the industry’s strategic nature, the companies’ profitability, financial market conditions and welfare/social considerations, the agency added.