The government’s intention to divest its substantial 60.72% stake in IBDI Bank is unlikely to materialize within this fiscal year. Instead, the government is poised to postpone this divestment to the next fiscal year.
As a consequence of these deferred divestment plans, it is improbable that the government will reach its divestment target for the ongoing fiscal year, which has been set at ₹51,000 crore. Nonetheless, the government is banking on increased non-tax revenues, specifically counting on higher dividends from both the Reserve Bank of India (RBI) and public sector banks, to counterbalance any potential revenue shortfall. This approach aims to help the government maintain its fiscal deficit target at 5.9% of the GDP, even if the divestment target is not met.
In the previous fiscal year, the RBI transferred ₹87,416 crore to the government as dividends for FY23. Additionally, the government received an equity dividend of approximately ₹13,800 crore from publicly listed public-sector banks (PSBs) during FY23.
It’s worth noting that the government’s divestment target for FY24, set at ₹51,000 crore, is lower than the target for the previous financial year. The FY23 estimates were revised downward from an initial target of ₹65,000 crore to ₹50,000 crore.
Previously, the government had aimed to initiate financial bids for IDBI Bank by December 2023 and conclude the transaction in the fourth quarter of the current fiscal year. The anticipated proceeds from the government’s sale of its stake in IDBI Bank were expected to exceed ₹15,000 crore, with the financial due diligence process commencing in July.
The Finance Ministry has not responded to inquiries regarding this matter. In FY24, the government had plans to divest its stakes in IDBI Bank, Shipping Corporation of India, BEML, and Container Corporation of India.
It’s important to note that the government had abandoned the strategic disinvestment of Bharat Petroleum Corp. Ltd last year, a move that was projected to generate ₹50,000-60,000 crore. Subsequent efforts to revive this divestment plan were not reinitiated following reviews, with the decision influenced in part by the cooling of oil prices.