New Delhi: The government is likely to consider a modified proposal to raise funds through buyback of its equity by state-owned companies to meet the ambitious disinvestment target of Rs 40,000 crore for the current fiscal.
The proposal, which was put on hold in the last Cabinet meeting due to objections raised by certain ministries, is scheduled to be taken up again tomorrow, sources said.
Last week, the Cabinet had deferred the proposal as key ministries opposed the idea of asking Public Sector Undertakings (PSUs) to utilise cash reserves to buy back government holding.
"A modified buyback proposals would be placed before the Cabinet for appropriate decision tomorrow," sources said.
The Department of Disinvestment (DoD) had earlier also sought the opinion of concerned ministries for buyback of shares and prepared a list of cash-rich PSUs in this regard.
Several ministries like oil, power, steel, coal and mines are believed to have opposed the proposal as it could impact the business expansion plans of the PSUs.
Further, the market regulator Sebi had last week relaxed norms for buyback of shares and dilution of equity by companies.
It would help the companies to complete the process of selling shares within days against the normal process which can take months, a move which could further facilitate disinvestment process.
The DoD has also suggested, among other things, promoting cross-holding of equities between CPSEs, which would help the government raise money without diluting its holding in such PSUs.
DoD has already sought the opinion of concerned ministries for buyback of shares and is believed to have identified about two dozen cash-rich PSUs, with a total balance of nearly Rs 2 lakh crore.
The companies which have been identified by the government include SAIL, NMDC, ONGC, NTPC, Coal India, Oil India, MMTC, Neyveli Lignite, NHPC, BHEL and GAIL.
With nine months of the fiscal already over, the government has been able to mop up only Rs 1,145 crore through the follow-up offer of Power Finance Corporation.
The government has been thinking of raising funds through the buyback route, as it has not been able to raise money through sale of equity in the public sector units on account of uncertainty in the stock markets.
Under the buyback mode, the government can raise money by selling its equity in the company to the PSU itself.