Govt. earns ₹85,000 crore from disinvestment, overshoots target

Govt. earns ₹85,000 crore from disinvestment, overshoots target

1. Government has achieved disinvestment of Rs 85,000 crore in the current fiscal, which is Rs 5,000 crore more than the set target for 2018-19. The next financial year’s disinvestment target has been set at Rs 90,000 crore. Disinvestment is defined as the action of an organisation (or government) selling or liquidating an asset or subsidiary.
2. The government was able to reach its target due to (a)It earned up to Rs 9,500 crore from the fifth tranche of CPSE ETF and (b)raised up to Rs 14,500 crore after state-run Power Finance Corporation (PFC) acquired shares of Rural Electrification Corporation (REC).
3. Government has constructed a fund to sell the shares in PSUs. It is called CPSE Exchange Traded Fund. The CPSE ETF is managed by Reliance Nippon Life Mutual Fund. It comprises shares of the 11 public sector undertaking companies which are (a)ONGC (b)Coal India (c)IOC (d)Oil India (e)PFC (f)REC (g)Bharat Electronics (h)NTPC (I)SJVN (j)NLC and (k)NBCC.
4. Exchange Traded Funds (ETF) are index funds that are listed and traded on stock exchanges just like regular shares. They are a basket of stocks with assigned weights that reflect the composition of an index.
5. The ETFs trading value is based on the net asset value of the underlying stocks that it represents. The ETF is aimed at helping speed up the government’s disinvestment programme.