Thursday 31 December 2015

GOVERNMENT STARES AT 50,000 CRORE SHORTFALL IN DISINVESTMENT PROCEEDS

The Finance Ministry is staring at a shortfall of Rs 50,000 crore in disinvestment target for the current fiscal and is hoping to make up for it through higher revenue realisation, sources said.
The Government has so far raised only Rs 12,700 crore through PSU disinvestments in the current fiscal and may raise another Rs 6,000-7,000 crore in the remaining three months.
“There would be at least Rs 50,000 crore shortfall with regard to disinvestment target. The government would meet the shortfall through taxable, non-taxable revenue mop-up,” an official source said.
The Government had budgeted to raise Rs 69,500 crore via disinvestment of PSUs in current fiscal. Of this, Rs 41,000 crore was to come from minority stake sale in PSUs and another Rs 28,500 crore from strategic stake sale.
However, with volatile stock markets, the Government has been able to mop up Rs 12,700 crore through stake sale in four PSUs — Indian Oil, REC, PFC and Dredging Corp.
The Government is likely to step up efforts to mop up additional resources by hiking duties and seeking higher dividends from PSUs to make up for the anticipated shortfall in disinvestment and direct tax proceeds in its bid to meet the fiscal deficit target.
The Government on December 16 increased the excise duty on petrol by Rs 0.30 per litre and by Rs 1.17 a litre on diesel to make use of slump in oil prices to garner additional Rs 2,500 crore.
This was the second increase in excise duty in less than six weeks. The Government had on November 7 raised excise duty on petrol by Rs 1.60 per litre and on diesel by Rs 0.30 a litre.
As regards dividend, the Government is pushing blue-chip PSUs to either step up their capex or pay higher dividends and not sit on cash pile.
The Government had budgeted to collect Rs 36,174 crore by way of dividend from the public sector enterprises, higher than last year’s realisation of Rs 28,423 crore.
It has already received a dividend of Rs 65,896 crore from RBI, which is higher than this year’s budget projection of Rs 64,477 crore.
Making up for the shortfall in disinvestment through other sources is essential for meeting the fiscal deficit target of 3.9 per cent of GDP.
As regards tax collection, the government is likely to face a shortfall of Rs 30,000-40,000 crore in direct taxes. However, this shortfall will be made good by the robust indirect tax realisation

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