The SBI 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. (Image: Reuters)
The government is likely to meet its target of limiting fiscal deficit to 3.2% of GDP this financial year as it is on track to realise the budgeted disinvestment receipts of Rs 72,500 crore, SBI said in a recent research report. Last month, an ET Now report said that, the government could be staring at a revenue shortfall of Rs 50,000 crore as the proceeds from disinvestment and spectrum sale are likely to be low. According to the SBI 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% 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”. The government’s disinvestment target will get a further boost with the IPO of New India Assurance, the largest general insurance company in India which is set to hit bourses next month. The public offer will fetch the government up to Rs 8,000 crore out of a total IPO size of over Rs 10,000 crore, according to various news reports.
“After 2009-10, this may for the first time government would able to meet the disinvestment target, as budgeted,” SBI Research noted. The government has already raised about Rs 19,759 crore through minority stake sale in Central Public Sector Enterprises (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, according to PTI reports.
The research further notes that the government needs to cut expenditure substantially, in order to manage fiscal deficit. “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.
