Budget 2020 India: Speaking about meeting 3.5 per cent defict target set for the next fiscal, Sitharaman said the increased revenue proceed and realisation of disinvestment proceeds will help meet the target.
Union Budget 2020 India: Listing of insurance behemoth LIC and stake sale in IDBI Bank will help the government garner close to half of its record Rs 2.10 lakh crore disinvestment target for the next fiscal.
On horizon is the stake sale in oil marketing firm BPCL, Concor and Shipping Corporation of India in the next few months.
Finance Minister Nirmala Sitharaman expressed confidence in meeting the ambitious disinvestment target for 2020-21 as some of the major stake sale are lined up over next few months.
“You will see successful disinvestment happening within the next few months….So obviously, I agree between July and now a lot of legwork has been completed and the benefits are going to go into the next financial year. So, you may hold me having set the target which I did not fulfill but within six months, I can stand up and tell you, we have done a lot of work,” she said in interaction with media after Budget presentation on Saturday.
For the next financial year, beginning April 1, the government expects a substantial Rs 90,000 crore revenue from disinvestment of government stake in public sector banks and financial institutions. This would be in addition to Rs 1.20 lakh crore estimated to be mopped up from CPSE stake sales in 2020-21.
Taking into account disinvestment proceeds from CPSEs and share sale in banks and financial institutions, the budgeted disinvestment mop up has been set at Rs 2.10 lakh crore for 2020-21.
Besides, the Cabinet approved stake sale of Tehri Hydro Development Corp of India and North Eastern Electric Power Corporation (Neepco) to NTPC.
Disinvestment target essentially going to come from listing of LIC and also from dilution of government’s stake in IDBI Bank, Finance Secretary Rajiv Kumar said.
The government currently owns 100 per cent in LIC, while it holds around a 46.5 per cent stake in IDBI Bank.
“The listing will decide the valuations (of LIC). We will work on this,” he said.
Without giving the exact timeline for listing of LIC, Kumar said, “We will follow the extant procedure for listing and for other things including the legislative changes it requires in consultation with the Ministry of Law and that process we already started”.
Speaking about the proposed disinvestment pipeline, Department of Disinvestment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said some of the large ones are going to spill over to the next year and their receipts are going to come in the next fiscal.
“The transactions are all lined up as you know again the expression of interest on Air India is already out and very soon BPCL expression of Interest will be out and so on so forth. So, therefore we are quite hopeful we will be achieving disinvestment target for the next fiscal,” Pandey said.
Speaking about meeting 3.5 per cent defict target set for the next fiscal, Sitharaman said the increased revenue proceed and realisation of disinvestment proceeds will help meet the target.
“The way in which revenue generation is improving now. In the last three months, GST collection has crossed Rs 1 lakh crore…I hope the corporate tax cut and the benefits derived by new companies will all come to play in the coming months, I guess therefore, they will be an improvement,” she said.
These will give a little comfort that deficit will come down from 3.8 per cent to 3.5 per cent in the next fiscal, she added.
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On a question as to why there was no provision for public sector bank recapitalisation, she said, it will be provided as and when required.
When asked about Rahul Gandhi’s comment on the Budget that it has nothing about job creation, the finance minister said: “I have given lot many details about the employment in my long Budget speech. Every new scheme, every new steps are focussed on the employment and youth”.
On income tax rates moderation for individuals on condition that they give up exemptions and deductions, Sitharaman said the government eventually want to bring rate down and remove all exemptions in the long run.
“We want to reduce tax rates. So to achieve that we have come up this year with a new scheme with very limited exemptions to it…because there are some exemptions which are absolutely indispensable,” she said.
Meanwhile, Employees’ union of LIC has strongly opposed the government’s plan to sell a part of its holding in the country’s largest financial institution through a public issue.
“LIC has always been the last resort for funding for other public sector entities. We strongly oppose the government’s proposal to sell a portion of its holding in LIC,” All-India Life Insurance Employees Federation General Secretary Rajesh Nimbalkar told PTI.
Further, he said the government’s move is against the interest of the public because growth of LIC is the sheer outcome of the dedication and faith of policyholders and its agents.