Arun Jaitley launches Bharat-22 ETF

Goods and Services Tax- File

For the financial year 2017-18, the government hopes to raise Rs 72,500 crore by divesting stakes in public sector firms. While launching the new ETF, Arun Jaitley said past experiments with CPSE-ETF have proven to be successful. Compared to the energy-heavy CPSE ETF, Bharat 22 is a well diversified portfolio with six sectors, namely basic materials, energy, finance, FMCG, industrials and utilities.

"While selecting the constituent, we tried to ensure that the Bharat 22 Index would be better performing than the previous indices", Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Kumar Gupta said at the press conference.

Last fiscal Government had raised Rs 8500 crore through a similar fund as part of its 2016-17 disinvestment exercise. Ltd, and Coal India Ltd from the energy sector; State Bank of India, Axis Bank, Bank of Baroda, Rural Electrification Corp Ltd, Power Finance Corp.

The index will comprise of 22 companies with "finance" component at 20.3% weightage. Power Grid, NTPC, Gail India, NHPC, NLC and SJVNL make up the utilities. ICICI Prudential AMC will be the ETF Manager and Asia Index Private Limited (JV BSE and S& P Global) will be the Index Provider. Jaitley said government has targeted a "fairly stiff" Rs 72,500 crore through disinvestment in the current fiscal, of which about Rs 9,300 crore has been raised thus far. These are expected to touch United States dollars 7 trillion by 2021. "It will be different tranches as per requirement of the government", he said. The finance minister said the sale of stocks of public sector banks is consistent with the government's policy of consolidating the banking sector.

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Apart from banks and CPSEs, the ETF will include shares of government's strategic holding in Axis Bank, ITC and L&T held through SUUTI (Specified Undertaking of Unit Trust of India). "This is low cost, less risk, highly liquid assets and is a transparent investment and is traded real time in the market place", he said.

"Large investors including sovereign and pension funds have been preferring this mode of investment".

Ninety per cent of the equities included are traded in futures.

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