India is entering the New Year with quite refreshed hopes and targets. But it’s the nature of argument to look beyond what has been achieved and what has been left out. Especially with the general elections being eyed upon in the coming year.

It’s an obvious move to see where the country lacked where it prospered.
India’s government has struggled to generate even half of the proceeds it had projected from planned sales of state-run enterprises this year. It also failed divestment plans for the fifth consecutive year.

Two government sources that the government might not meet its divestment target in 2023–2024 by Rs 30,000 crore ($3.60 billion). The current fiscal year, which ends in March 2024, was intended to yield 510 billion rupees for New Delhi from the profits of divestiture.

About Rs 30,000 crore billion of the Rs 51,000 crore objective was anticipated to be reached in 2023–2024 through the sale of IDBI Bank stakes and the privatization of NMDC Steel, a state-owned company.

The Reserve Bank of India, the country’s banking regulator, has been slow to screen potential buyers for IDBI, so the sale deadline has been extended past the federal elections of 2024.

Due to state and federal elections in the summer of next year, the sale of NMDC Steel will not be completed this year. The company’s primary factory is located in the mineral-rich state of Chhattisgarh, where unions have opposed the sale and it is a significant employment.

Large-scale privatization initiatives like those for CONCOR, Shipping Corporation of India (SCI), and Bharat Petroleum Corporation Ltd. (BPCL) have already been shelved. According to analysts, significant privatization won’t occur until after the general elections in April or May.

Where has Indian Government failed?

As the next general elections are upheave and the fiscal year is near its end, can any more privatization apprehensions’ take place?
Since 2019, problems like land ownership and union resistance have prevented Indian Prime Minister Narendra Modi’s government from carrying out plans to sell enterprises in a variety of sectors, including steel, fertilizer, and oil and gas.

“During this government’s term, there will be no privatization,” stated former federal finance secretary Subhash Chandra Garg. “Forget divestment and privatisation for next six months because of lack of political interest in privatisation policy.”

According to official figures, the government has already received 80 billion rupees this year via stock sales. According to the first source, state-run companies’ increased dividend payments to the government would somewhat make up for the shortfall in this year’s aim.

These companies have been able to increase dividends due to strong profits and consistent demand.

The government has already received 203 billion rupees from state-run companies and hopes to surpass its dividend target of 430 billion rupees.

India’s Fiscal year GDP growth

Facing the divestment target delay, the government’s goal of a 5.9% GDP fiscal deficit will not be impacted by the privatization delays.
Despite Indian markets reaching all-time highs this year, the government has only been able to sell minority holdings in five of its enterprises through so-called offer for sales via stock exchanges.

According to Rahul Bajoria, an economist at Barclays Investment Bank, “missing divestment targets is fine as long as the government is meeting its fiscal targets and there isn’t a shortfall.”

Early in January, the government announced forecasts for the 2022–2023 fiscal year, which runs from April 2022 to March 2023, and states that the Indian economy will grow by 7%. It comes after a growth of 8.7% the year before.

Services are the most significant and rapidly expanding sector of the Indian economy. Over 60% of GDP is accounted for by trade, lodging, transportation, and communication; financial, insurance, real estate, and business services; and community, social, and personal services.

Let’s hope the coming economic months will prove to be a shiny for the country’s planned targets with the government reaching its goals at least on the appointed time, positively.