New Delhi - The Bharat 22 and Central Public Sector Enterprises (CPSE) Exchange Traded Funds (ETFs), launched over the last two years as part of the government's disinvestment programme, are performing better than the Indian stock exchanges owing to the Centre's clear cut policy favouring investors, a top official said on Monday.
At a post-budget interaction here organised by industry chamber Ficci, Investment and Public Asset Management Secretary Neeraj Kumar Gupta said the government's stalled divestment programme had now taken shape and a number of state-run enterprises were in the pipeline for privatisation.
Presenting the Union Budget 2018-19 in Parliament last week, Finance Minister Arun Jaitley announced that the proceeds from selling government stock in companies this year, at Rs 1 lakh crore, had already exceeded the fiscal's target of Rs 72,500 crore. He has set a disinvestment target of Rs 80,000 crore for the coming financial year.
"The CPSE ETF and the Bharat 22 ETF are outperforming the Sensex (Bombay Stock Exchange) and Nifty (National Stock Exchange)," Gupta said.
"This is because, the CPSEs are treating their investors much better than their private counterparts," he said.
Designed to bring broad-based ownership pattern to public sector enterprises, the Bharat 22 ETF comprises 22 companies, or investments, from among CPSEs and public sector banks (PSBs). The ETF is well diversified with investments across six core sectors, including industrials, finance, utilities, energy, fast moving consumer goods and basic materials.
An ETF is a traded security that tracks an underlying asset like a group of companies or commodity. The government had earlier approved the alternative mechanism through the ETF route to divest its stake in CPSEs. It had raised Rs 8,500 crore through the CPSE ETF route in the last fiscal.
The alternate mechanism will be used to take decisions for divestment through ETF for all listed CPSEs, subject to the government retaining a 51% stake in them.
Declaring that it was no longer "market distorting" to divest government holdings because the Indian private sector had become competitive, Gupta, however, said that, unlike the government, the latter did not have a clear policy on dividends.
"The government's disinvestment programme has finally come on track after 12 years. DIPAM (Department of Investment and Public Asset Management) came out with a clear cut policy on the expectations of the investor," he said.
He also said the process of strategic disinvestment, whereby the government surrenders ownership of the company, is also proceeding apace, including the privatisation of Air India.
"We have already done eight (companies) and expressions of interest have come in from 7 companies," he added.