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Government of India
Ministry of Finance
04-August-2017 17:07 IST
The Finance Minister, Shri Arun Jaitley Announces a New Exchange Traded Fund (ETF) by the Name “BHARAT 22”

The Union Finance Minister Shri Arun Jaitley announced here today a new Exchange Traded Fund (ETF) by the name BHARAT 22. Bharat 22 consists of 22 stocks of CPSE's, PSB's & strategic holding of SUUTI (list as in Annexure). Compared to energy heavy CPSE ETF, Bharat 22 is a well Diversified portfolio with 6 sectors (Basic Materials, Energy, Finance, FMCG,  Industrials & Utilities).   The Bharat 22 Index will be rebalanced annually. ICICI Prudential AMC will be the ETF Manager and Asia Index Private Limited (JV BSE and S& P Global) will be the Index Provider.

 

In the Budget Speech of 2017-18, the Finance Minister Shri Arun Jaitley had promised to use ETF as a vehicle for further disinvestment of shares. The target for CPSE’s disinvestment in 2017-18 was set at Rs 72,500 crore. During the current Financial Year 2017-18, the Government has realised approx Rs 9,300 crore through nine disinvestment transactions so far.

 

Globally ETF Assets have grown significantly. Globally today there are 4 trillion dollar worth Assets Under Management (AUM). These are expected to touch $7 trillion by 2021. Large Investors (Sovereign/Pension Funds) prefer investing in ETFs due to the benefits of  ETF being Low cost & Less risky; being Highly Liquid assets; Transparent Investment and that these can be traded at Real Time Market Price

 

Highlights of Growth of ETF market in India include:

 

·         Flexibility in Investment guidelines of PF to invest in equity/ETF

·         ETF Assets Under Management (AUM) has grown ~5 times in last 3 years

 

Month

AUM (Rs. in crore)

Jun-17

53,917

Mar-17

50,215

Mar-16

20,698

Mar-15

12,838

Mar-14

11,403

 

·         ETF has been a preferred instrument for investment by PF's following flexibility given to them by govt. for their investments.

·         Government raised Rs.8500 crore by divesting through CPSE ETF in FY'16-17.

 

 

1: Bharat 22 Index – Index constituents

 

Sr. No.

Company Name

Basic Industry

Weight (%)

1

National Aluminium Co Ltd

Basic Materials

4.4

 

 

Total - Basic Materials (%)

4.4

2

Oil & Natural Gas Corp Ltd

Energy

5.3

3

Indian Oil Corp Ltd

Energy

4.4

4

Bharat Petroleum Corp Ltd

Energy

4.4

5

Coal India Ltd

Energy

3.3

 

 

Total - Energy (%)

17.5

 

 

 

 

6

State Bank of India

Finance

8.6

7

Axis Bank Ltd

Finance

7.7

8

Bank of Baroda

Finance

1.4

9

Rural Electrification Corp Ltd

Finance

1.3

10

Power Finance Corp Ltd

Finance

1.0

11

Indian Bank

Finance

0.2

 

 

Total - Finance (%)

20.3

 

 

 

 

12

ITC Ltd

FMCG

15.2

 

 

Total - FMCG (%)

15.2

13

Larsen & Toubro Ltd

Industrials

17.1

14

Bharat Electronics Ltd

Industrials

3.3

15

Engineers India Ltd

Industrials

1.5

16

NBCC (India) Ltd

Industrials

0.6

 

 

Total - Industrials (%)

22.6

 

 

 

 

17

Power Grid Corp of India Ltd

Utilities

7.9

18

NTPC Ltd

Utilities

6.7

19

Gail India Ltd

Utilities

3.7

20

NHPC Ltd

Utilities

1.2

21

NLC India Ltd

Utilities

0.3

22

SJVN Ltd

Utilities

0.2

 

 

Total - Utilities (%)

20.0

 

 

Annexure 2: Reform initiatives and benefiting component sectors

 

Sr. No.

Government Reforms/ Initiatives

Sectors that may benefit

1

Financial sector reforms:

    Insolvency and Bankruptcy Code 2016

    Monetary Policy Committee

    Expansion of Banking sector

    Digital and Cashless Economy

    Listing of Insurance Companies

    Finance

2

Taxation reforms:

    Goods and Services Tax (GST) - Single Indirect tax structure aimed at eliminating cascading effect of indirect taxes.

    Basic Materials

    Energy

    Finance

    FMCG

    Industrials

    Utilities

3

Infrastructure reforms:

    Improvement in quality of infrastructure

    Speeding up clearance of stalled infrastructure projects

    Basic Materials

    Industrials

4

Liberalisation of Foreign Direct Investment (FDI) in India:

Progressive liberalisation to permit FDI in most sectors under the automatic route.

    Finance

    Industrials

5

Manufacturing in India:

    Expanding Manufacturing facilities in India

    International Skill Development Centre for domestic workers.

    Basic Materials

    FMCG

    Industrials

6

Oil & Gas Sector Reforms

    Direct Benefit Transfer of LPG subsidies

    Introduction of Daily Fuel pricing.

    Energy

    Utilities

7

Energy Sector Reforms

    Providing 24x7 quality, reliable and affordable power supply

    Revival package for electricity distribution companies of India (DISCOMs).

    Energy

    Finance

    Utilities

 

 

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DSM/SBS/KA