INSUBCONTINENT EXCLUSIVE:
Based on REC's closing share price on Thursday, stake buy by PFC would be worth around Rs 10,800 crore.NEW DELHI: The government on
Thursday approved a plan by one state-owned lender to the power industry, Power Finance Corp, to acquire a majority stake in a similar
government-controlled lender, REC Ltd, Finance Minister Arun Jaitley said
The government did not disclose the price of the 52.63 per cent stake but based on REC's closing share price on Thursday, it would be
worth around Rs 10,800 crore
The sale may allow the government to say that it is getting closer to meeting its target of raising Rs 80,000 crore through the sale of
government stakes in various entities in the year ending March 31, 2019.PFC will have management control of REC, Jaitley told a news
conference, adding that a ministerial panel will work out the pricing and other aspects of the deal.Jaitley had previously announced that
the government would support mergers and acquisitions in cases where state-owned companies operated in the same area.Before the
announcement, which followed a cabinet meeting, the government had raised Rs 32,737 crore from the sale of government stakes during the
current fiscal year, according to an official website.If it falls short of the target, the government could struggle to meet its goal of
bringing the fiscal deficit down to 3.3 per cent of GDP in this fiscal year.However, because the sale involves two state-controlled
entities, critics of the government's privatisation programme say that any gains the administration of Prime Minister Narendara Modi seeks
to book are not credible as the money would merely have gone from one pocket to another."The acquisition is driven by the government's
intent to meet its disinvestment target Instead of a sovereign money, it is a quasi-sovereign money
It is just creating a book entry," said stock market expert Ajay Bagga.The government owns 66 per cent of PFC.It would not be the first time
that the government has sold a state-owned asset to another government entity and sought to count the proceeds towards its target.In the
previous fiscal year the government sold its 51 per cent stake in Hindustan Petroleum Corp to state-owned explorer Oil and Natural Gas
Corp.The April-October fiscal deficit was 103.9 per cent of the target, indicating that the government - which faces a general election by
May next year - must boost its tax and non-tax revenue to fund various welfare schemes.For the latest News Live Updates on Election Results
from each assembly constituency in Madhya Pradesh, Rajasthan, Mizoram, Chhattisgarh, Telangana, like us on Facebook or follow us on Twitter
