The central government has increased the target for disinvestment proceeds more than 300 percent from Rs 65,000 crore (revised estimate) in 2019-20 to Rs 210,000 crore in 2020-21. This is a significant jump in the estimate as the government has already revised the current years' disinvestment target from Rs 105,000 crore to Rs 65,000 crore.
But in contrast, the government has only managed to only raise Rs 18,000 crore worth of disinvestment proceeds. On breaking up the disinvestment receipts for the coming financial year, the government has set two components, Rs 120,000 crore from disinvestment receipts and Rs 90,000 crore from disinvestment of PSU banks and financial institutions. The top three PSU's on which the government is expecting huge receipts through disinvestment include BPCL, Air India and LIC.
Life Insurance Cooperation of India: Biggest ever IPO in India
As per the government's estimate, it is expected to raise Rs 90,000 crore through the partial sale of stakes in state-owned life insurance company LIC and IDBI Bank. The Life Insurance Cooperation of India is expected to be partially disinvested in the second half of the year through an Initial Public Offering (IPO) which will be the most valued company in the country surpassing Reliance Industries and Tata Consultancy Services (TCS) as well the one of the largest in the world. The size of the LIC can be understood with the fact that the company has an investment book of around Rs 29 trillion as at the end of March-19 which is more than the total assets under management of the entire mutual fund industry.
Currently, the government of India holds a 100 percent stake in the company and through its ambitious disinvestment targets, it is expecting to raise much-needed funds. The slowing pace of the economy and lower than expected collection of GST has forced the government to look for other avenues to raise funds. Ever since the announcement of the disinvestment of LIC was made in the budget speech, there has been opposition from the major factions including the employees of the company. In fact, the RSS affiliated trade union, the Bharatiya Mazdoor Sangh has also condemned the announcement saying it will be fatal.