Given the volatility in the capital market, in the backdrop of the global and domestic economic situation, the government has not come out with any public offer to sell its stake in PSUs, except PFC, this fiscal
New Delhi: The government on Friday said that mopping up Rs40,000 crore through disinvestment is a “stiff task” amid volatility in the capital markets even as it is looking at other options, like buyback of shares by PSUs, to meet the target, reports PTI.
“With the present trend and prevailing scenario in the capital market, achieving the disinvestment target of Rs40,000 crore during the remaining period of 2011-12 would be a stiff task,” said the Mid-Year Analysis, 2011-12, tabled in Parliament.
The government is envisaging mobilising Rs40,000 crore by selling its stake in public sector undertakings (PSUs) through public offers, but has so far managed to collect only Rs1,145 crore from Power Finance Corporation’s follow-on public offer (FPO).
Given the volatility in the capital market, in the backdrop of the global and domestic economic situation, the government has not come out with any public offer to sell its stake in PSUs, except PFC, this fiscal.
So far this fiscal, receipts from disinvestment and miscellaneous heads are Rs2,731 crore, as against Rs2,235 crore in the comparable period last year.
Meanwhile, finance secretary RS Gujral said, “We still feel that there is a possibility of it (achieving the target),” and the government is looking at other options, including buyback of shares by PSUs, besides public offerings.
Asked if share buyback by PSUs is also among the options, Mr Gujral said: “There are options, including buyback. That is one of the options.”
The secretary, however, said the decision on the process of disinvestment would be taken by finance minister Pranab Mukherjee in consultation with Department of Disinvestment (DoD).
“It is between the disinvestment secretary and the finance minister. If any of those options require Cabinet approval, the ministry will take it. We are working on it,” he said.
According to sources, the DoD has circulated a Cabinet note to seek views of different ministries to sell government equity through buy-back mode in PSUs.
About a dozen cash-rich units, like Coal India, SAIL, NMDC, ONGC and NTPC, have been identified for the purpose, they added.
The Cabinet Committee on Economic Affairs has also approved disinvestments in SAIL, ONGC, HCL, BHEL and NBCC.
According to IRDA, the total (public and private) number of insurance policies that lapsed during FY 2010-11 stood at 1.40 crore, with an assured sum of Rs1.58 lakh crore compared to 1.23 crore policies with an assured sum of Rs2.14 crore in FY09-10
New Delhi: The total number of insurance policies that lapsed in the public and the private sector rose to 1.40 crore during 2010-11 from 1.23 crore in the previous fiscal, reports PTI.
According to the Insurance Regulatory Development Authority (IRDA), the total (public and private) number of insurance policies that lapsed during FY 2010-11 stood at 1.40 crore, with an assured sum of Rs1.58 lakh crore.
This was against 1.23 crore policies with an assured sum of Rs2.14 crore in FY09-10, finance minister Pranab Mukherjee said in a written reply to the Lok Sabha.
He added that the total number of policies sold in FY10-11 stood at 1.10 crore and there were 2,189 complaints of mis-selling registered with IRDA during the period.
On measures taken by the insurance sector watchdog to ensure a healthy insurance market in the country, he said: “IRDA has mandated insurance companies to put in place an efficient system of grievance redressal and establishment of IRDA Grievance Call Centre (IGCC) and Integrated Grievance Management System (IGMS)...”
“The Authority on 20 September 2011 notified guidelines on persistency of policies i.e. percentage of policies in continuity to the total number of policies.
“As per these guidelines, agents are required to maintain an average persistency rate of 50%. The licence of the agent is renewed only if this condition is met,” Mr Mukherjee added.
Net equity inflow for the month of November was Rs-52 crore. The Sensex is down 17% since last November and investors prefer to pull out their money. New Fund Offers (NFOs) have not helped much either
After three consecutive months of positive inflows, equity mutual funds witness a net outflow of Rs52 crore, according to AMFI data. Equity inflows for the months August to October 2011 totalled Rs3,636 crore. In August 2011, equity mutual funds had seen a jump in inflows after two consecutive months of negative inflows. The inflow of Rs1,986 crore in August was the highest net inflow reported in a month since February 2011 and the second highest since July 2009. However, the inflows could not be sustained for long. Inflows have followed a declining trend since then.
NFOs (new fund offers) haven’t brought in much, as well. The two NFOs launched in the month of November 2011—Tata Retirement Savings Fund-Moderate Plan and Tata Retirement Savings Fund-Progressive Plan, could pull in just Rs10 crore of investment. Whereas the last two NFOs prior to this—Peerless Equity Fund and Edelweiss Select Midcap Fund—pulled in Rs24 crore, and Rs6 crore, respectively. A rather poor performance compared to Union KBC Equity Fund which got Rs167 crore of investments in June 2011.
The past year (December 2010 to November 2011) saw just 13 NFOs being launched with a total inflow of Rs902 crore whereas the year prior saw 20 NFOs being launched bringing in Rs4,369 crore. Not only has the number of NFOs fallen, the average inflow per NFO has fallen from Rs218 crore to Rs69 crore, a drop of 68% for the same period. This is quite surprising as for the period December 2010 to November 2011, equity mutual funds had an net inflow of Rs8,156 crore compared to the same period the year previous which had a net outflow of Rs18,877 crore. The fall in the market over the past year probably did not seem like an attractive period for investors put their money in NFOs—or probably NFOs were not attractive enough for them.
November 2010, when the market was at its peak, saw and outflow of Rs103 crore, which was considerably less compared to the huge outflows seen in the month prior to it. A year later, when the Sensex is down 17%, investors somehow do not feel it is the right time to invest.
This is probably the psyche of investors, the market probably seems too volatile and lacks proper direction and thus may not seem a proper time for them to invest. They would rather keep their money in banks when inflation is soaring. Equity is the key to long-term wealth creation and investing systematically is the answer to overcome the volatility in the market. Investors lack proper guidance and need hand-holding every step of the way. This is something which is still yet to be addressed by the regulator. The so called financial advisors are there only as long as they get investments from the client. In times of disputes, advisors are nowhere to be seen. Except for a certain few, who value their customers.