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PSU stake sale key to achieve deficit targets

* Despite volatile markets,DoD needs to meet the Rs 30K cr sell-off target

Written by Surabhi | New Delhi |
August 21, 2012 12:46:07 am

Despite volatile markets,the department of disinvestment needs to meet the Rs 30,000 crore target from stake sales of state-run firms in the current fiscal. This is likely to be one of the key recommendations of the high-powered committee on fiscal consolidation led by chairman of the Thirteenth Finance Commission,Vijay Kelkar.

“With a slowdown in economic activities,the potential to raise revenue from taxes gets affected and so the pressure non-tax revenues increases. The target from disinvestment proceeds has been significantly relaxed compared to last fiscal and it must be met,” said a source close to the development.

The three-member committee was appointed by finance minister P Chidambaram to suggest a road map for fiscal consolidation through revenue and expenditure side adjustments. Sources said the committee has an open mandate to examine all issues and recommend a plan to keep the fiscal deficit at the Budgeted level of 5.1 per cent in 2012-13.

The committee,which includes former expenditure secretary Sanjiv Mishra and economist Indira Rajaraman as members,has already begun to hold meetings and is likely to submit its report by the first week of September.

“The government disinvestment plans must remain independent of market volatility,” the source said,adding that the committee is also likely to put forth the same view. Last fiscal too,volatile market conditions forced the government to postpone the sell-off process. As a result,it could raise only Rs 14,000 crore against a target of Rs 40,000 crore.

The Thirteenth Finance Commission report,which was authored by the same team,had also suggested depending heavily on disinvestment proceeds for bridging the fiscal deficit. Pointing out that disinvestment increases non-debt capital receipts,thereby allowing the government to increase its capital expenditure without impacting the fiscal deficit,the finance commission had suggested listing all public sector firms which would have brought in an estimated Rs 3,81,000 crore.

The issue of meeting divestment targets was also taken up by Chidambaram in a meeting last week with officials of the department of disinvestment. The minister is understood to have emphasised the need to achieve the Rs 30,000 crore target and also reviewed the list of PSUs lined up for stake sales.

Nearly 15 companies including Oil India Limited,NMDC Ltd,Hindustan Copper Ltd,Hindustan Aeronautics Ltd as well as Neyveli Lignite Corporation Ltd are likely to go in for stake sales this fiscal,according to the list prepared by the finance ministry.

Kelkar committee

* The committee on fiscal consolidation has an open mandate to examine all issues and recommend a plan to keep the fiscal deficit at the Budgeted level of 5.1% in 2012-13

* The panel has already begun to hold meetings and is likely to submit its report in September

* Nearly 15 firms including OIL,NMDC,Hindustan Copper and Neyveli Lignite are likely to go in for stake sales this fiscal

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