Analyst corner: Fuel subsidy unchanged amid steady crude oil price
The government’s elevated disinvestment target along with the proposal to create more headroom for divestment in non-financial PSUs may act as a technical overhang on the stocks; it may also inhibit divestment of cross-holdings by other PSUs. The government has increased excise duties on auto fuels by `2/litre, which have been passed on to end-consumers by the OMCs. The subsidy provision in the budget remains unchanged amid steady crude price environment.
The government’s proposal to include shareholding of the other government-controlled entities in its own calculation of requisite promoter stake of 51%, provides it significantly higher headroom for disinvestments in energy PSUs going forward.
