India is set to miss its revised disinvestment target by a huge margin for the second time in the last eight years. This is likely to happen as the government’s plan to raise Rs 60,000 crore from the Life Insurance Corporation of India (LIC) IPO is jeopardized. This will be the second time for the government to miss the disinvestment target since it came to power in 2014. Earlier in 2019-20 also, the government had missed the revised disinvestment target of 65,000 crore. Only 50,304 crores were raised that year.
In the current financial year, a revised target has been set to raise 78,000 crores from disinvestment. So far the government has been able to raise only 12,400 crores.
Government’s concern increased
- In view of the turmoil in the stock markets due to the deepening of the Russia-Ukraine war, the government may postpone LIC IPO to the next financial year. If this happens, the disinvestment target will remain incomplete.
- Stock markets have been volatile since Russia’s attack on Ukraine. The government is worried that if the IPO is brought in such a situation, it may not get favorable investor support. Due to this, the amount that the government will get from its stake sale may be less than expected.