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The Government is betting big on disinvestments in 2020-21 to help it tide over the tight fiscal situation and comfortably achieve a reasonable fiscal deficit target of 3.5 per cent of GDP for that year.
In the Finance Minister Nirmala Sitharaman’s second Budget, disinvestment target for 2020-21 has been pegged at a three-fold increase of ₹2.1 lakh crore as against revised estimate of ₹65,000 crore.
It may be recalled that the Budget estimate for disinvestment receipts in 2019-20 was pegged at ₹1.05 lakh crore. This has now been brought down to ₹65,000 crore at the revised estimate stage. Even if one were to compare it from a Budget estimate for 2019-20 to Budget estimate of 2020-21 level, the overall target has been doubled.
The latest target of ₹2.1 lakh includes ₹90,000 crore that Government expects to mop up from divestment of government stake in public sector banks and financial institutions. Sitharaman announced in her Budget speech on Saturday that Government would look to completely exit from IDBI Bank and also do a partial sale of stake in Life Insurance Corporation through initial public offering (IPO) route.
Commenting on the Budget proposals and disinvestment target, DK Srivastava, Chief Policy Advisor, EY India, told BusinessLine that the disinvestment target for 2020-21 looks “ambitious” and the 3.5 per cent fiscal deficit projected for 2020-21 is “critically dependent on this disinvestment target”.
Madan Sabnavis, Chief Economist, CARE Ratings, said that the boldest thing in the Budget has been the disinvestment number and the target of ₹2.1 lakh crore is a three-fold increase over the revised estimate. “Major bet is on disinvestment and this is a bold announcement. I think they are hopeful of doing transactions around BPCL, Air India and LIC next fiscal besides IDBI Bank . This big target of ₹2.1 lakh crore seems achievable,” Sabnavis said.
He said that big amounts of non-tax revenues from telecom companies (₹70,000 crore increase in AGR revenues) expected for 2020-21 would also help the Government meet the fiscal deficit target of 3.5 per cent of GDP.
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