India A Bright Spot Compared To Other Economies: DIPAM Secretary Tuhin Kanta Pandey
The general optimism about India has been sustained, said the DIPAM Secretary.
Despite global headwinds and geopolitical uncertainties restricting overseas inflows, there is some optimism about India, according to Tuhin Kanta Pandey, secretary at the Department of Investment and Public Asset Management.
DIPAM has set an divestment target of Rs 65,000 crore for the current fiscal. Through sales, initial public offerings and employee sales, the department has made Rs 24,543,67 crore from disinvestment.
The total DIPAM receipts stand at Rs 42,381.41 crore, including Rs 17,837.74 crore obtained through dividends from the Central Public Sector Enterprises.
Seven months in, there is uncertainty over achieving the full target for disinvestment.
As central banks batten down the hatches for recession in advanced economies, Pandey told BQ Prime that India remains a "bright spot" as compared to other economies.
“Emerging markets are not unaffected, of course, but India is still in the bright spot as compared to other economies. However, the foreign flows do get impacted by the policies of central banks, especially the U.S. Federal Reserve.”
Interest in foreign flows has remained a key concern as the country fights inflation and the spillover of central bank tightening abroad. So far this year, the total outflow by FPIs in equities has reached Rs 1.70 lakh crore; however, the pace of outflow seemed to slow down in October.
Meanwhile, domestic markets have held on, Pandey said.
“The domestic flows have been good in this industry. Particularly, the mutual fund industry. If you see, although a lot of outflows were there in FPIs, there have been significant inflows from the domestic market, and the Indian markets have actually held on in between,” he said.
The general optimism about India has been sustained, and FPIs have also resumed transactions despite a challenging global environment, he said.
According to Pandey, apart from the current fund flow, the responsibility of disinvestment is more long-term as opposed to short-term trading in the stock markets.
“Strategic disinvestment is slightly different from normal disinvestment. The objective is that management control of companies be passed on in a strategic disinvestment, so that is long-term. It's not really in the sense of coming and going as you have it (in terms of) flows into the stock markets,” he said.
He explained that the disinvestment process in itself is quite long. It involves the expression of interest in the first stage, followed by financial bidding in the second stage before the closing transactions are completed. Eventually, regulatory approvals are signed for the companies' management control to be handed over.
“So, the transactions will nevertheless proceed because it (disinvestment) depends on the kind of bidders who may be interested ,(even though) the other (global) flows do get impacted by the overall economic environment,” he said.
In the next five months, the department is expected to look towards some strategic transactions that have already been on the table for some time.
The DIPAM Secretary noted that deals pertaining to the Shipping Corp. of India Ltd., BEML Ltd., HLL Lifecare Ltd., and Project and Development India Ltd. are in advanced stages, awaiting financial bids. IDBI Bank Ltd., which has invited expressions of interest, will also be one of the most-watched deals this year.