The government has set its divestment target for FY14 at Rs 54,000 crore. Till a few weeks ago, meeting that target looked like a daunting task, but things have changed rapidly in the last few days. The fiscal deficit number will be met on the back of non-tax revenues and expenditure cuts, which is not the best way to achieve fiscal consolidation.
The saving grace, however, is the fact that there is going to be no extra borrowing this year. Furthermore, there was a concern that private sector borrowing would be crowded out if the government did some year-end sudden borrowing, that too, wont be happening now.
The government had Rs 54,000 crore target on disinvestment of which about Rs 4,000 crore has already been done. With the Coal India special dividend where they will get close to Rs 24,000 crore and the Finance Ministry saying that the Cabinet Committee on Economic Affairs (CCEA) will take up the Hindustan Zinc-BALCO resident stake sale next week or the week after, they are likely to get another Rs 25,000 crore.
Apart from that, the government has Rs 3,000 crore from the PSU ETF from the Indian Oil crossholding. After this disinvestment, it will get another Rs 4,500-5,000 crore. So, in total, it actually adds up to a little beyond Rs 54,000 crore.
There is also the 12 percent stake sale of Axis Bank which will get the government another Rs 6,000 crore. So, they will have options in case one of these does not work out.
Apart from that, the other big question on the fiscal deficit was the shortfall in tax collections which is likely to come in at about Rs 70,000-80,000 crore. That will be balanced by the cuts in expenditure.
The Finance Ministry on January 10 sent out the memorandum to all the ministries saying that under no circumstances should the revised expenditure for expenditures be breached and the revised estimates are about Rs 1 lakh crore lower in terms of plan expenditure than what was planned earlier.
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