The government is likely to achieve its fiscal deficit target of 3.2 per cent this financial year as the budgeted disinvestment receipts are on track to realise Rs 72,500 crore, says an SBI research report. According to the report, though there are predictions that the government is going to have a big revenue slippage in 2017-18 which may impact fiscal deficit numbers, “such projections flunk the test of logical reasoning and are grossly misconstrued”.
“Fiscal deficit target of 3.2 per cent in FY18 seems not difficult, as revenue may be lower than budgeted, but more than offset by disinvestment and expenditure cuts,” said the SBI research report, Ecowrap. The report noted that the government will able to meet the disinvestment target of Rs 72,500 crore as Rs 60,000 crore has already been achieved and hence the fear of low disinvestment receipts is “completely unwarranted”.
“After 2009-10, this may for the first time government would able to meet the disinvestment target, as budgeted,” it noted. In the current year so far, the government has already raised about Rs 19,759 crore through minority stake sale in CPSEs and strategic disinvestment.
Further, the takeover of HPCL by ONGC will garner about Rs 30,000 crore and the disinvestment in GIC raised Rs 10,662 crore for the government. Interestingly, the government also plans to sell its entire stake in Hospital Service Consultancy Corporation (HSCC), Engineering Projects (India) Ltd (EPI) and National Projects Construction Corporation (NPCC) to a similarly-placed CPSE.
The report however noted that to manage the fiscal deficit, the government needs to cut expenditure substantially. “We estimate that government may cut around Rs 70,000 crore from capital expenditure and Rs 38,000 crore from revenue expenditure compared to budget estimate of FY18. With this, the fiscal deficit will stay at the same level,” it said.