Using the gains from the low global crude oil prices, the finance ministry is hoping to offset any shortfalls from disinvestment proceeds this fiscal.
“There are expected to be about Rs 30,000 crore to Rs 40,000 crore savings in the fuel subsidy as well as additional revenue generation due to the low oil prices, higher excise duty, along with measures such as ‘give it up’ for LPG subsidy. We have to see how this materialises as the rupee too is very volatile,” said a senior official.
The finance ministry is banking on these savings to meet any shortfall in revenue from stake sales in public sector units that is necessary to meet the fiscal deficit target.
“Minority stake sales in PSUs are going on and it looks like the target will be met. But we have to see what happens in strategic sales,” said the official.
The Centre had budgeted Rs 69,500 crore from disinvestment in PSUs in 2015-16, of which Rs 41,000 crore is expected from minority stake sales and another Rs 28,500 crore is estimated to be raised through strategic sales.
Cooling global crude oil prices have given a cushion to the finance ministry, which is targetting a fiscal deficit of 3.9 per cent in 2015-16. Prices of Brent crude — the international benchmark touched $ 45.04 a barrel on Thursday, much below the estimated $69 a barrel when the Budget was prepared in February this year.
According to official data, the price of Indian basket decreased to Rs 2820.40 per barrel on August 26.
The Centre has allocated Rs 30,000 crore as petroleum subsidy this fiscal. Low oil prices have also kept under recoveries low and have meant that the Centre has not sought additional funds for the fuel subsidy in the first supplementary demand for grants that however, sought permission for an extra net cash out go of Rs 25,495.24 crore.
Meanwhile, the finance ministry is also expecting some savings on food subsidy with the National Food Security Act yet to be implemented by all states.
“Most of the projections in the Budget have been made in a very realistic manner. But there could be some savings on food subsidy as the Food Security Act is yet to be rolled out across the country. Further, the launch of direct benefit transfer for food could also lead to some savings,” said the official, adding that a clearer picture would emerge towards the end of the fiscal.
The Union Budget 2015-16 had allocated Rs 1,24,419 crore towards food subsidy, almost the same as the revised estimate for last fiscal.
Estimating an additional fiscal space of Rs 37,000 crore for the Centre in 2015-16 due to lower oil subsidy and additional revenue, India Ratings had said in a recent report that this could be utilised for higher capital expenditure on infrastructure and or recapitalisation of public sector banks.