Another important component for the government to maintain the sanctity of the fiscal deficit target would be capital receipts especially from disinvestment.
Government on Wednesday said it will raise Rs 72,500 crore through disinvestment of PSUs, including listing of three railway PSUs --IRCTC, IRFC and IRCON--and the proposed merger and consolidation to create globally competitive public sector units.
“Our ETF comprising of shares of 10 CPSEs has received an overwhelming response in the recent further funding offering. We will continue to use the ETF as a vehicle for further divestment of shares. Accordingly a new ETF with diverse CPSEs stocks and government holding will be launched in 2017-18,” Jaitley said in his Budget speech.
But the government does not boast of a stellar track record in meeting its stake sale targets. Fiscal 2016-17 is the seventh year in a row when the government would not be meeting the disinvestment target fixed in the Budget.
As much as Rs 56,500 crore was budgeted to be raised through PSU disinvestment in 2016-17.
In 2014-2015, the Modi-government missed the target by 44%, it got worse in the next year at 41.5%. Till November 2016, 59% of the disinvestment target has been met.
Sluggish market conditions have been the biggest dampener for the government’s stake sale programmes for the past few years. And a 60% increase in the target doesn’t look very smart, given forecasts that Asian markets are likely to continue their choppy run given uncertain crude prices, trade tensions and Fed rate hikes will exert pressure.
The Union Budget for 2016-17 had set a disinvestment target of Rs 56,500 crore. Of this Rs 36,000 was to be garnered from disinvestment of Central Public Sector Enterprises (CPSEs) and another Rs 20,500 crore from strategic stake sale. But as per Finance Ministry data the government managed to realise Rs 23,529 crore till November 2016, which include Rs 21,432.38 crore through minority stake sale in 14 CPSEs and Rs 2096.35 crore through strategic disinvestment.