Having spent about 94 percent of the full-year expenditure target in the first eight months of the financial year, the government has gone into an overdrive to mop up any bit of revenue it can lay its hands on.
During the budget last year, finance minister P Chidambaram had outlined a 4.8-percent-of-GDP target for financial year 2013-14, or Rs 5.42 trillion.
But with government data showing Rs 10.2 trillion being spent by November even as tax revenues remained extremely weak in the face of the sluggish economy, a deficit of about Rs 5.1 trillion had already been hit.
While it is not unusual for a government to miss its deficit target, given the country’s precarious state of finances in the last few years, credit rating agencies have been keeping a hawk eye on the deficit and any slip-up this time could result in a downgrade of the country’s bonds (already trading at BBB, the last in the "investment grade" order) to junk status.
The government has in the past few months come out with a slew of measures to either increase its revenues or cut expenses. Here are a few:
- State-run Coal India and NMDC have reportedly been asked to shell out Rs 15,000 crore and Rs 2,500 crore, respectively, as special dividends
- The government will sell its residual stake in Hindustan Zinc and unlisted Bharat Aluminium Co. Once state-run companies, both firms are majority owned by the Vedanta Group. The government owns a 29.5 percent stake in Hindustan Zinc (worth about Rs 16,500 crore at current market price) and 49 percent in Balco.
- The government has asked Oil India and ONGC to pick up 10 percent stake in oil-marketer Indian Oil Corporation. This happened after the oil ministry expressed its reservations to the finance ministry over an outright stake sale given Indian Oil’s low prevailing share price. At current prices, this could result in revenues of about Rs 5,000 crore for the government.
- The government is reportedly looking to sell part of the residual stake in ITC, Axis Bank and L&T that it holds via a special undertaking. The undertaking holds 11.32 percent, 20.72 percent and 8.2 percent, respectively, in the three companies
- The government late last year announced a 10 percent mandatory cut in non-plan expenditure for the fiscal year.
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