The government expects to get around Rs 15,000 crore (Rs 150 billion) through the divestment of shares in oil and power companies, state-owned banks and Maruti Udyog [Get Quote] and Bharat Heavy Electricals [Get Quote] (Bhel) during the next fiscal year.

Government officials told Business Standard that the Centre hoped to generate around Rs 50,000 crore (Rs 500 billion) over the next three years to help develop the social sector and strengthen public sector companies.

The funds raised from the sale of government stakes in PSUs will be parked in the National Investment Fund.

• Run-up to the Budget 2005-06

The finance ministry intends to appoint fund managers by April to take care of the divestment proceeds. The fund managers will be drawn from the public sector.

The Centre is planning to sell around 5 per cent stakes in PSUs through public offers. According to estimates, the divestment in Bhel and Maruti was expected to generate around Rs 4,000 crore (Rs 40 billion).

Power Finance Corporation [Get Quote] and PowerGrid Corporation of India Ltd are also in the divestment list.

In the case of oil companies, the government intends to finalise the details of the sale once the expert group headed by V Krishnamurthy submits its report. The finance ministry is also keen on the sale of a part of the government holding in the Shipping Corporation of India [Get Quote].

It also intends to unlock value in some banks that are planning public offers to raise capital ahead of the implementation of the Basel II rules.

The finance ministry recently cleared the Punjab National Bank [Get Quote] public offer that would have the bank return a part of the capital it raised through the dilution of equity.

Despite the accrual of interest to the National Investment Fund, only a part of the funds required for the ambitious social infrastructure upgrade programme of the United Progressive Alliance government would come through divestment, officials said.

The idea of the fund was to make it self-sustainable and large enough to provide for social sector schemes, officials added.

On the block

• The Centre is planning to sell 5% stake in PSUs through public offers. Divestment of Bhel, Maruti is expected to generate around Rs 4,000 crore.
• Power Finance Corporation and Power Grid Corporation are also in the divestment list.
• The funds raised from the sale of government stakes in PSUs will be parked in the National Investment Fund.
• The finance ministry intends to appoint fund managers by April to take care of the divestment proceeds. They will be drawn from the public sector.