The current investment environment has been not good due to the COVID-19 situation. It can affect the disinvestment target set by the government.
There is a considerable shortfall in tax revenue, and the fiscal deficit is likely to increase this year due to the COVID crisis. The government had set an aggressive disinvestment target of ₹2.1 lakh crore for FY 2021, which could help fill the gap in the finances. The Finance Minister Nirmala Sitharaman had announced that the government is keen to open private participation in all sectors under Prime Minister Narendra Modi’s Atma Nirbhar Bharat plan. The planned stake sales of BPCL and Air India can play a crucial role here.
But the whole idea to press ahead with the divestments can misfire at this juncture as the investment climate is subdued due to the ravaging effect of coronavirus. The pandemic crisis has badly hit both the airline and oil & gas sectors, with players struggling to survive and fuel demand expected to remain low throughout this year. The market may not recover fully even next year as India recorded its worst GDP figure in the last quarter, and it will not be prudent for the government to push for the divestments.