The Budget has provided Rs 10,000 crore for recapitalisation of banks in 2017-18. But what is reassuring is the FM’s statement that need based additional allocation would also be considered, emphasising focus on the resolution of stressed legacy accounts.
The Government also announced several Public Sector Undertaking (PSU) reforms, like revised mechanisms and procedures to ensure time bound listing of identified Central Public Sector Enterprises or CPSEs on the stock exchanges. This will foster greater public accountability and unlock the true value of these companies.
Additionally, CPSEs will be integrated across sectors through consolidation, mergers and acquisitions. This will give them capacity to bear higher risks, avail economies of scale, take higher investment decisions and create more value for the stakeholders. DTA Consulting principal Deepak Talwar hailed this decision, “This is a much delayed and much needed step.”
Sectors such as oil and gas, the Finance Minister indicated is a focus area. Here, the Government proposes to create an integrated public sector ‘oil major’ which will be able to match the performance of international and domestic private sector oil and gas companies.
The budget also announced that 3 Rail Public Sector Enterprises (PSEs) like IRCTC, IRFC and IRCON would be listed in the stock markets. The Finance Minister said that the Exchange Trade Fund (ETF), comprising shares of ten CPSEs, has received overwhelming response in the recent Further Fund Offering (FFO). The Government will continue to use ETF as a vehicle for further disinvestment of shares. Accordingly, a new ETF with diversified CPSE stocks and other Government holdings will be launched in 2017-18.
Dealing with the markets, high net worth NBFCs can also now participate in IPOs just like the banks and insurance companies. Systemically important NBFCs regulated by RBI and above a certain net worth would be categorised as Qualified Institutional Buyers (QIBs) by SEBI at par with the banks and insurance companies, making them eligible for participation in IPOs with specifically earmarked allocations. This will strengthen the IPO market and channelize more investments.