New Delhi: Ahead of the forthcoming Budget, the government is likely to miss the targets of divestment and the strategic stake sales in FY2021-22, with the centre rebooting its plans for the sale of PSU players.

In the ongoing financial year, investors could only cheer for the long-pending privatisation of Air India, with hopes pinned on more such plans turning fruitful soon. However, nothing major materialised since then.
Market experts believe that disinvestment and privatisation are likely to gain further traction in the upcoming Union Budget. Asset monetisation and higher disinvestments would continue to offer funding support in FY23, said market experts.

In the near term, the government is likely to speed up the process of strategic disinvestment and PSU privatisation, which was slower than expected in the past few years, said Axis Securities.
Budgetary disinvestment target will likely be missed in FY22, with the delay in the LIC IPO, which most likely would be rolled over in FY23 Budget if not materialised in remaining months of current fiscal," it added in its report.

Key rollovers in disinvestment are seen becoming part of the FY23E disinvestment agenda, said ICICI Direct Research in its pre-budget report.
The list includes stake sale in BPCL (Rs 50,000 crore), IDBI Bank (Rs 25,000 crore) and other entities like Shipping Corp, Concor, Pawan Hans, BEML (Rs 30,000 crore), privatisation of two PSU banks (Rs 55,000 crore) and LIC OFS (Rs 65,000 crore).

Other than these, the finance minister in her previous Budget announced the privatisation of a couple of state-run lenders and a general insurance company to achieve the targets.
The undone task of privatisation of two PSBs will be automatically carried forward to the next fiscal with other strategic sales of other companies.

According to the reports, the Indian Overseas Bank and Bank of Maharashtra were ace candidates for privatisation, whereas the Bank of India and the Central Bank of India were also in the league. General Insurance Corporation of India emerged as the top pick from the insurance sector.
Divestment targets for next fiscal
Analysts expect that the divestment targets for the new financial year are likely to be elevated, though a lot will depend upon the proposed initial public offering (IPO) of Life Insurance Company of India (LIC).

"We expect a similar target for disinvestment in FY23, and we may see a few new names added to the existing list of disinvestment and privatisation candidates," said Religare Broking.
FY22 disinvestment receipts are unlikely to be anywhere close to the budgeted target, but if the LIC IPO, BPCL disinvestment, etc are undertaken in FY23, the government can rake in large resources, said Edelweiss Research.

IPO of LIC is the key
Market watchers believe that despite the higher target divestment for the upcoming financial year in the Union Budget, LIC IPO will be the key for the targets.
According to the various reports, the government may fastrack this stake sale in the ongoing financial year, with the insurance behemoth filing its DRHP in the next few days.

"We are factoring in divestment revenue of Rs 1.75 lakh crore in FY23, although we anticipate slippage in the divestment target for FY22," said Nirmal Bang Institutional Equities in its reports.
The brokerage expects divestment of Rs 1 lakh crore in the ongoing fiscal, assuming the LIC divestment goes through and the life insurer floats its IPO before FY22-23.