Disinvestment goal for FY18 may be raised to garner funds
As finance minister Arun Jaitley looks to slash taxes and ramp up spending to support the sagging economy, the disinvestment target for FY18 is set to go up. Experts said Jaitley would have to mobilise necessary reve­nue via strategic selloff to avoid fiscal slippage. Failing that, he could invite a rating downgrade from international credit rating agencies.
The government’s task is cut out given that it has ne­v­er met its disinvestment target in recent years. It has targeted to raise Rs 56,500 cr­ore in FY17, of which Rs 36,000 crore is to come from minority stake sale and sha­re buyback and Rs 20,500 crore from strategic selloff. It has, so far, raised nearly Rs 30,000 crore, more than half of which has come from share buyback.
The government could mop up about Rs 11,600 cro­re by selling minority stakes in PSUs – nearly Rs 5,600 crore via offer for sale in NHPC, NBCC and MOIL and Rs 6,000 crore in the second tranche of CPSE exchange-traded fund.
The government has fai­l­ed to do strategic sale of even single PSU, though Niti Aa­yog has identified 32 loss-m­aking and profitable CPSEs.
The budget comes at a time when demonetisation has triggered economic slo­wdown. This prompted IMF to cut its growth forecast for India by 1 percentage point. RBI and the central statistical office have cut growth estimates by 0.5-7.1 per cent.
According to IMF, China has grown at 6.7 per cent in 2016, snatching away the tag of the fastest-growing economy from India.
Under the fiscal glide pa­th outlined by Jaitley in the budget for FY16, the government is required to set fi­s­cal target at 3 per cent of GDP in FY18, much tig­h­t­er than 3.5 per cent in FY17. If the government adheres to the envisaged fiscal deficit target, not much room would be left for the government to indulge in extravagance.
But the government has indicated that it can switch to a fiscal band from the current practice of targeting a fixed number.
Noor Mohammad