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Union Cabinet likely nod for NTPC selloff
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Thursday, 22 Nov 2012

Times of India reported that the Union Cabinet is likely to give the green signal to sale of 9.5% stake in state run NTPC on November 22nd 2012, a move which is expected to rise up to INR 13,000 crore. If the proposal is approved, it is likely to rejuvenate the delayed stake sales initiative of the government and help raise INR 30,000 crore that it plans to garner in the current fiscal year.

The government currently holds 84.5% stake in the state run power generation company and after the sale, it will come down to 78%. The UPA coalition has set an ambitious target of raising INR 30,000 crore from disinvestment in the current financial year but volatile market conditions and valuation issues have delayed the plan. In the previous financial year, the government had to postpone the selloff process in some state run firms due to choppy market conditions and managed to raise INR 14,000 crore against the budgeted target of INR 40,000 crore.

Disinvestment is a key component of the government's strategy to restore the health of its public finances. Last month, Mr P Chidambaram finance minister said that the government expects to raise the budgeted receipts under disinvestment and non tax receipts.

Mr Chidambaram said that "The department of disinvestment has obtained approval of the Cabinet for disinvestment in Hindustan Copper Ltd, Nalco, SAIL, RINL, Bhel, OIL, MMTC and NMDC. Government expects to realize the budgeted receipts under disinvestment and non tax receipts."

The government is trying to raise resources against the backdrop of slowing growth to fund its large social welfare schemes. It is also battling to rein in the fiscal deficit close to the revised target of 5.3% of GDP in the current financial year. The lukewarm response to the auction of second generation airwaves has hurt the plan to raise cash from this exercise. The finance ministry has launched an austerity drive and is keeping a close watch on spending by various departments and ministries.

Source - Times of India


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