Bharat 22, a pioneering initiative by the Government of India, symbolizes a dynamic blend of economic resilience and strategic diversification. Launched with the vision to bolster India’s investment landscape and propel growth across diverse sectors, Bharat 22 represents a curated portfolio comprising leading public sector enterprises, blue-chip companies, and strategic holdings. This ambitious undertaking not only reflects the government’s commitment to fostering economic prosperity but also underscores its strategic approach towards asset monetization and wealth creation. With its comprehensive scope and strategic composition, Bharat 22 emerges as a cornerstone in India’s journey towards building a robust, self-reliant economy poised for sustainable development and global competitiveness.
What is Exchange Traded Fund?
- An Exchange-Traded Fund (ETF) functions similarly to stocks, as it is a type of investment fund traded on stock exchanges.
- ETFs typically comprise assets like stocks, commodities, or bonds and usually utilize an arbitrage mechanism.
- The aim is to maintain trading close to its net asset value, although occasional deviations can happen.
- Investors may find ETFs appealing due to their cost-effectiveness, tax efficiency, and similarities to stocks.
- The Bharat-22 ETF, the second ETF introduced by the Government of India after the CPSE ETF, is consequently drawing interest from investors in the stock market.
Bharat 22 ETF
- Bharat 22 ETF is poised to mirror the performance of 22 stocks slated for government disinvestment.
- Each unit of the ETF represents a portion of the fund, with issued units available for trading on exchanges at quoted prices.
- The ETF will encompass six sectors: basic materials, energy, finance, FMCG, industrials, and utilities.
- In addition to public sector banks, miners, construction firms, and energy giants, it will incorporate some of the government’s holdings in SUUTI (Specified Undertaking of Unit Trust of India).
- ICICI Prudential AMC will oversee the management of the Bharat 22 ETF, with Asia Index serving as the index provider. The index will undergo annual rebalancing.
Why is it important?
- The ETF mechanism has emerged as a savvy and efficient tool for the government to achieve its disinvestment objectives, playing a crucial role in managing the fiscal deficit.
- Through the ETF route, the government can strategically divest small stakes (typically 2-3 percent) across a diverse array of assets, offering a streamlined approach.
- Notably, the Bharat 22 ETF surpasses the CPSE ETF with over double the number of stocks (10 stocks) and boasts broader sector coverage, enhancing its appeal to investors.
FAQs
1. What is Bharat 22?
Bharat 22 is an Exchange Traded Fund (ETF) created by the Government of India to divest its stake in 22 select Central Public Sector Enterprises (CPSEs), Public Sector Banks (PSBs), and other strategic holdings. It was launched to facilitate disinvestment and promote broader participation of retail and institutional investors in India’s public sector undertakings.
2. Which companies are included in Bharat 22?
Bharat 22 comprises a diverse portfolio of companies spanning various sectors such as finance, energy, utilities, and industrials. Some prominent constituents include State Bank of India (SBI), Coal India Ltd, Indian Oil Corporation Ltd (IOCL), Power Grid Corporation of India Ltd (PGCIL), and Bharat Electronics Ltd (BEL), among others.
3. How does investing in Bharat 22 benefit investors?
Investing in Bharat 22 offers investors exposure to a diversified basket of well-established, government-owned companies with strong fundamentals and growth potential. Additionally, the ETF provides a convenient and cost-effective way for investors to gain exposure to multiple blue-chip stocks simultaneously, reducing individual company risk.
4. What are the key features of Bharat 22 ETF?
Bharat 22 ETF offers several attractive features, including a diversified portfolio of 22 CPSEs and PSBs, transparent and efficient pricing through the ETF mechanism, low expense ratio compared to actively managed funds, and the potential for capital appreciation and dividends from underlying companies’ performance.
5. How can investors participate in Bharat 22?
Investors can participate in Bharat 22 by purchasing units of the ETF through stock exchanges where it is listed, such as the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE). The ETF units can be bought and sold like stocks, offering liquidity and flexibility to investors. Additionally, investors can invest in Bharat 22 through various mutual fund platforms and brokerage accounts.
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