Government May Set Ambitious Divestment Target In Budget

The government may look to raise as much as a record Rs. 1 lakh crore ($15.7 billion) from the sale of state assets in the next fiscal year to help meet tough fiscal deficit limits while giving it room to boost spending and woo voters before general elections that must be called by early 2019.

Investment bankers and economists expect Finance Minister Arun Jaitley to set an ambitious target for the year beginning on April 1 following strong sales in the current fiscal year to the end of March.

The government is on track to raise about Rs. 92,500 crore this fiscal year after state-run ONGC, an upstream oil company, agreed to pay Rs. 36,900 crore to buy just over 51 per cent of refiner HPCL.

The deal is set to close this month and would take the government’s asset-sales tally beyond the budget goal of Rs. 72,500 crore, marking the first time in eight years that India had exceeded its targets.

As part of a goal to gradually bring down the fiscal deficit, the government has set a target for the current fiscal year of limiting the deficit to 3.2 per cent of GDP and to 3 per cent for the upcoming year. Analysts say the government is likely to miss this year’s target and may also revise next year’s goal.

 

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