India’s big disinvestment win may just be a one-off event.

Historically, the Indian government's disinvestment data may have been a downer, but that's certainly not the case anymore.

The Narendra Modi government cashed out a record Rs91,000 crore ($14 billion) of its investments in financial year 2018. The proceeds will be a big comfort to finance minister Arun Jaitley on Feb. 01 when he delivers the budget speech.

His ministry has had a rough year balancing the government's budget for the financial year 2018. On the one hand, the goods and services tax (GST) regime threw up all kinds of systemic glitches, and on the other, the government faced the aftermath of demonetising high-value currency notes.

But one could almost hear a sigh of relief from North Block on Jan. 20 this year as state-owned Oil and Natural Gas Corporation (ONGC) agreed to buy out the government's entire 51.1% stake in Hindustan Petroleum Corporation (HPCL). While some do not see the deal as a disinvestment at all, it has added over Rs36,000 crore (over $5 billion) to the government's proceeds.

While presenting its previous budget, the government had set itself the task of raising Rs72,500 crore (over $11 billion) from disinvestments, which consisted about 3.4% of the total estimated revenue for financial year 2018. To put that number in context, the last time divestment collections hit a record high was in the previous fiscal, with Rs46,200 crore.

"If one looks at the disinvestments story for financial year 2018, it is certainly much more encouraging than what has happened in the past. Certainly, it will help the government. In some ways, it will offset the other revenue targets which the government is unlikely to accomplish this fiscal," Sunil Kumar Sinha, principal economist of India Ratings & Research, told Quartz. "It will help bridge the gap and somewhere closing the fiscal deficit for the current fiscal year."

The finance ministry has seen a revenue shortfall on several fronts this year. The dividend paid by the Reserve Bank of India reduced by over 50% from the previous financial year, leaving the ministry facing a shortfall of over Rs27,ooo crore. The government has also reportedlyestimated a tax shortfall of Rs55,000 crore.

Biggest contributors

While the ONGC-HPCL deal met over 50% of the year's divestment target, a slew of well-timed initial public offerings (IPOs) also helped the government raise a significant amount from markets. Specifically, the listing of two major state-owned insurers, General Insurance Corporation of India and New India Assurance, brought in over Rs17,300 crore. The listing of Housing and Urban Development Corporation and Cochin Shipyard also met the government's expectation.

Another gamble that paid off this year was the bunched-up offering of minority stake in 22 well-performing public sector companies, as a part of the exchange traded fund (ETF)—"Bharat 22." An ETF is an investment fund that tracks an index and can be traded like common stocks.

When Bharat 22, the Indian government's second ETF, hit the market in November 2017, it received an overwhelming response from investors, raising Rs14,500 crore (pdf). Bharat 22 is expected to add a similarly significant chunk to the government's account in financial year 2019.

"The fund has increased about 5-6% from the launch date. There is good appetite in the market for the index," Nitin Kapadia, business head for exchange-traded funds at ICICI Prudencial Asset Management Kapadia's, which manages Bharat 22, told Quartz. "People have had a good experience (with Bharat 22), and if we come up with an offer, people should participate."

Meanwhile, minority stake sales and buyback of shares by state-owned companies were the relatively smaller contributors this year, adding around Rs12,300 crore and slightly over Rs4,000 crore, respectively.

The way ahead

It is now expected that, enthused by this year's performance, Jaitley may set a similarly ambitious divestment target for the next fiscal. A number of government-owned companies, including the infrastructure consulting arm of Indian Railways, RITES, are expected to be listed.

Jaitley had also announced plans to list the subsidiaries of Indian Railways, including the Indian Railway Catering and Tourism Corporation, and its financing arm, the Indian Railway Finance Corporation, in fiscal 2018. Their IPO preparations are underway and they may hit the bourses next year.

Others, like the defence aerospace company, Hindustan Aeronautics, are also in the pipeline. So are two state-owned insurers, including United India Assurance. And if civil aviation minister Jayant Sinha's interview to Bloomerg earlier in January is anything to go by, then Air India is also on the list.

A key factor to be considered is whether the market participation will remain robust year after year.

"There are new investors participating in the market. The EPFO (Employee Provident Fund Organisation) itself has invested around Rs22,000 crore this year. There is new money in the markets—so many other pension funds have also started investing. New retail participation has been seen. There's lot of depth in the market as of now," Kapadia said.

However, such heavy dependence on disinvestments may not be sustainable. While the government needs to diversify its revenue sources, it must also focus on improving the efficiency of state-run businesses. As the outlook for tax collections remains somewhat uncertain, Jaitley will likely hope that the continuing market euphoria helps the government's finances next year, too.