New Delhi: India is once again set to miss its disinvestment target of Rs 80,000 crore in 2019, having received just 43 percent (Rs 32,142 crore) from the sale of stake assets in the first nine months of FY19. By missing its target, India is also likely to miss its fiscal deficit target for the year ending March 2019. "In this fiscal year meeting the disinvestment target of Rs. 80,000 crore will be challenging for the government given the volatile conditions in the financial markets," CARE Ratings said in a research report.
"We expect that the disinvestment proceeds could be around Rs 60,000 crore for the full fiscal year 2018-19. The shortfall in the disinvestment proceeds along with low GST collections is likely to further pressurise the fiscal situation of the Central government and fiscal deficit target of 3.3 percent could not be met."
The report says that the abrupt roll-out of the goods and services tax (GST) last year, which resulted in uncertainty around revenue collections — coupled with a shortfall of about Rs 20,000 crore — could push the fiscal deficit up to 3.5 percent of GDP. This puts further pressure on the Modi government's plans of keeping the fiscal deficit at 3.3 percent of GDP.
"We expect that the disinvestment proceeds could be around Rs 60,000 crore for the full fiscal year 2018-19. The shortfall in the disinvestment proceeds along with low GST collections is likely to further pressurise the fiscal situation of the Central government and fiscal deficit target of 3.3 percent could not be met."
According to the report, the government is expected to garner about Rs. 14,000 crore by selling 52.63 percent stake in Rural Electrification Corporation (REC). The government can also raise another Rs. 12,000 crore though the buyback of PSUs shares. Last year, India made plans to sell 76 percent stake in state-run carrier Air India in an attempt to cut the fiscal deficit.
