If the deepening fiscal deficit is the single-most worrying factor for analysts and economists, they can take heart from at least four crucial issues that Finance Minister Pranab Mukherjee addressed but got lost in the noise on the Street.

He said that in due course, the government intends to move to a system of direct transfer of fertilizer subsidy — estimated at Rs 50,200 crore in 2009-10 — to farmers. The subsidy that stood at Rs 76,000 crore last fiscal has been a subject of immense criticism given that it does not reach small farmers and is largely cornered by bigger producers, mostly those who grow cash crops. Mukherjee’s call for a nutrient-based susbidy system in place of the current product-pricing regime will also ensure better targeting and more sustainable utilisation.

The Minister may have been conservative in not setting a modest target from disinvestment but his intent is clear. He wants to raise the threshold for non-promoter public shareholding of all listed companies, including PSUs, from the average 15 per cent now. This clearly means the market can expect follow-on public offers from listed PSUs.

The biggest measure, if the UPA government manages to act upon, will be to dismantle the administered pricing regime of petroleum products. Mukherjee said that, in tune with international economies, including India’s neighbours’, he would set up an expert group to advise on a “viable and sustainable system” of pricing petrol, diesel, LPG and kerosene. The move will dramatically improve valuations of the PSU oil behemoths that bear the brunt of under-recoveries or losses because of sale of petroleum products at prices much lower than the global crude oil prices.

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