Govt should leverage PSU rally to boost capex, says Axis AMC

Well-executed PSU divestment plan could yield far-reaching benefits

- SAMIE MODAK

The government should leverage the rally in shares of public sector enterprises (PSUs) to maintain the pace of capex while at the same time reducing its fiscal deficit, Axis Asset Management Company (AMC) has said in a report.

"By divesting in a staggered manner, reducing their holdings by 300 basis points each year, the government could generate over ₹2 trillion (0.6 per cent of GDP) in capital receipts. This would help bridge the fiscal deficit and reduce net market borrowing," the asset manager said.