Journalism of Courage
Worried by the bear run in stock markets across the world following the US debt downgrade,the government is reviewing its plans to sell stake in state-run firms and line up as few as just three to four more PSUs to the market in the
current fiscal a move which could directly impact the fiscal deficit.
Under the plan being worked out,state-run ONGC,Steel Authority of India,NBCC and Hindustan Copper may be amongst the few firms that hit the market with their public issues. The government may choose to defer disinvestment in MMTC,BHEL and RINL to the next fiscal. With the current volatility in the stock market,it does not seem possible to bring in any public issues during the second quarter. The third and fourth quarter also give limited time due to the shraadh season and then the holiday season in December-January,making only three to four issues likely, an official close the development said,adding that the government is still reviewing its plans. Disinvestment secretary Mohammad Haleem Khan had also indicated on Monday that the government may lower the disinvestment target of Rs 40,000 crore for the current fiscal. It is difficult to say,if the current target will remain intact or revised, he had said.
According to sources,the target from disinvestment receipts may be lowered to about Rs 20,000 crore to Rs 25,000 crore. While the government has already earned about Rs 1,100 crore from the 5 per cent stake sale in Power Finance Corp,it is expected to raise another Rs 20,000 crore from disinvestment in ONGC,SAIL,HCL and NBCC.
Lower realisation from disinvestment receipts would hurt the Centres plans to lower its fiscal deficit. The government has targeted a fiscal deficit of 4.6 per cent of GDP in 2011-12,but is finding it a difficult task on the back of soaring crude oil prices and lower revenue collections. It has been banking heavily on sell off proceeds to help meet the deficit.
In fact,the Centres fiscal deficit in the first quarter of 2011-12 touched nearly 40 per cent of the full year target and quadrupled to Rs 1.6 lakh crore from a year ago and economists expect it touch close to 5 per cent of the GDP in 2011-12.
It is a long way to go for the government in the current fiscal. The threat of a possible shortfall from disinvestment has always been there. The fiscal deficit numbers will anyways have to be revised as the growth projections for 2011-12 will have to be cut downwards from 9 per cent, said NR Bhanumurthy,an economist at the National Institute of Public Finance and Policy.
Last fiscal,the government had raised Rs 22,763 crore from sale of equity in public sector enterprises against a target of Rs 40,000 crore.
