lagging far behind in terms of achieving the ambitious target of raising Rs 40,000 crore during the current fiscal through divesting its stake in various state-owned entities, the Government on Monday announced the slashing of the figure by 60 per cent to Rs 16,027 crore in the Interim Budget and pushed the sale of its residual stakes in Hindustan Zinc ltd (HZl) and Balco to the next financial year.
The massive reduction of the disinvestment target announced in the Interim Budget for 2014-15 by Finance Minister P Chidambaram, ironically gelled with the overall insipid nature of the budgetary exercise - the last for the beleaguered UPA Government. The Finance Minister though on his part put up a brave face and oozed confidence on the fact that the twin problems of current account deficit (CAD) and fiscal deficit have been arrested in the current fiscal.
Speaking to mediapersons in a post-budget press conference, Chidambaram said that the economy is picking up and 6 per cent growth is doable in 2014-15. Fiscal deficit in the current fiscal will be 4.6 per cent, lower than the 4.8 per cent estimate, while the current account deficit has been reined in at $45 billion, he informed. Through disinvestment, so far the exchequer has received about Rs 3,500 crore from PSU stake sales, leaving about Rs 12,500 crore to be mobilised from selling shares in Indian Oil Corporation, BHEl and the Central Public Sector Enterprise Exchange Traded Fund (ETF).
The targeted mop-up from the sale of the Government’s residual stake in private companies, too, has been lowered to Rs 3,000 crore in this financial year from a budgeted Rs 14,000 crore, by way of selling Axis Bank shares held by Specified Undertaking of the Unit Trust of India (SUUTI). “We are selling only a part of SUUTI stake in Axis Bank this fiscal. Whether the other part will be sold next year is too early to say,” Chidambaram told reporters.
The Government expects to sell its remaining stake in HZl and Balco in 2014-15. It sold majority stakes in the two companies to the Vedanta Group during 2001-2003 and now holds 29.54 per cent in HZl and 49 per cent in Balco. The Government also holds some stake in larsen & Toubro and ITC through SUUTI. It proposes to mobilise Rs 15,000 crore from the stake sale in HZl and Balco and estimates disinvestment proceeds in 2014-15 at Rs 36,925 crore.
Meanwhile Chidambaram informed that ETF would consist of listed CPSE stocks. The Government will lose Rs 1,000-1,200 crore over the next three and a half months due to reduction in excise duty on vehicles and consumer goods announced in the Interim Budget. The Minister, however, added that the revenue loss “can be made up” if there is even five per cent pick up in sales. With an aim to give a boost to the manufacturing sector, Chidambaram announced cut in excise duty, or factory gate tax, on capital goods, consumer durables and vehicles.
On economic growth, he said, “efforts must be to ensure that this upturn remains an upturn and we climb from 5.2 per cent towards our goal of 6 per cent in 2014-15. “Its doable...,” he said, adding that the cut in total expenditure during the current financial year by about Rs 75,000 crore will not have much impact on growth. “Now (with) an expenditure size of Rs 15.9 lakh crore (for 2013-14), I don’t think Rs 75,000 crore (cut) will impact so much on growth as some people feared,” he said.
The estimate of overall expenditure was revised to Rs 15,90,434 crore in the interim budget from an earlier projection of Rs 16,65,297 crore, a cut of Rs 74,863 crore. The Central Statistics Office has estimated economic growth for the current financial year at 4.9 per cent compared with 4.5 per cent in 2012-13. The Government has cut Rs 79,790 crore from the budgeted Plan expenditure of Rs 5,55,322 crore for this financial year against the backdrop of a burgeoning fiscal deficit. The Interim Budget 2014-15, presented by Chidambaram in Parliament, revised the estimate of Plan expenditure to Rs 4,75,532 crore for 2013-14. On the other hand, the estimate of non-Plan expenditure was revised to Rs 11,14,902 crore in this financial year from the budgeted Rs 11,09,975 crore, a rise of Rs 4,927 crore.