Hind Zinc, Balco stake sale may ease govt's fiscal burden

Under-recovery on fuel prices and the provisions being made under the Food Security Bill are expected to put some strain on the government's balance-sheet. However, according to sources from finance ministry, there is enough leeway in the Budget to manage this stress, reports CNBC-TV18’s Aakansha Sethi.

A delayed rollout of the Food Security Bill may minimise the negative impact on the fiscal deficit. Sources in the finance ministry say that rollout will take time, a pan India rollout will be possible only in 3-4 months and hence the additional impact of the Food Security Bill will only be about Rs 5,000 crore. However, oil subsidies are likely to be much higher, under-recoveries for this year are now slated to almost Rs 140,000 crore.
According to finance ministry, it is likely to give a subsidy of about Rs 40,000 crore in addition to what was budgeted. In the first quarter itself a majority of the amount was given away to reimburse oil marketing companies (OMC) for the last quarter of the last fiscal and hence this year the government has only Rs 10,000 crore left and in addition it will have to give another Rs 40,000 crore.
The total stress on the fiscal deficit is likely to be to the tune of about Rs 40,000-50,000 crore on account of petroleum as well as food subsidies.
Sources in the finance ministry say that there is enough leeway in the Budget to manage this and they say stake sale of Hindustan Zinc and  Bharat Aluminium Company (BALCO) is likely to get the government about Rs 25,000 crore instead of the budgeted Rs 14,000 crore. This will help the government meet its fiscal deficit numbers which is something that the Finance Minister also said earlier on Tuesday.