Coal India
A worker unloads coal from a goods train at a railway yard in the northern Indian city of Chandigarh 8 July 8, 2014.Reuters

The department of disinvestment (DoD) wants the government to halve the PSU stake sale target for this fiscal to Rs 30,000 crore, as volatile stock market conditions have rendered disinvestment difficult. 

So far this year, the government has raised Rs 12,600 crore by selling its stake in four public sector undertakings (PSUs) as against the target of Rs 69,500 crore for 2015-16.

"The target of Rs 30,000 crore seems more reasonable for current financial year given that there is no big stock to sell," a source told PTI.

The Modi government had planned to raise Rs 69,500 crore through disinvestment in the current financial year, of which Rs 41,000 crore was targeted from minority stake sale and Rs 28,500 crore from strategic stake sale.

Last week, the DoD had extended for the third time the deadline to appoint merchant bankers in its efforts to sell a 10% stake in Coal India for about Rs 21,000 crore ($3.3 billion).

Merchant bankers have stayed away from the CIL stake sale process, citing a deficiency in CIL's environment sustainability commitments.

While more than 20 PSUs have cabinet approval for stake sale, the government completed disinvestment only in four companies - Power Finance Corporation (PFC), Rural Electrification Corporation (REC), Dredging Corp and Indian Oil Corporation (IOC).

The benchmark stock index had plunged by more than 1,600 points on the day of stake sale in IOC. The BSE Sensex faced its biggest one-day fall in the past seven years on that day.

However, the government-owned insurance major, Life Insurance Corporation of India (LIC) stepped in to rescue the government's 10% stake sale in IOC by buying 86% of the shares.

Similarly, the PFC stake sale happened on the day when the Sensex fell by over 550 points.

The government raised about Rs 25,000 crore in 2014-15 through disinvestment as against the target of Rs 58,425 crore. It has failed to meet the disinvestment target for the past five consecutive financial years.

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