The government is unlikely to complete the privatization of Air India Ltd, Bharat Petroleum Corp. Ltd (BPCL) and container Corp. of India Ltd (Concor) by March ending, leaving Rs 40,000-50,000 crore hole in its budget. The government’s ability to meet the fiscal deficit target of 3.3 per cent of gross domestic product (GDP), in a year where both direct and indirect tax collection has been well below expectation amid an economic downturn that has hit six and half year low of 4.5 per cent in September quarter.
While the government plans to privatize Air India by selling its 100 per cent ownership, it will divest its entire 53.29 per cent stake in BPCL and 30.8 per cent stake in Concor out of its current 54.8 per cent stake. It has set an ambitious disinvestment target of Rs 1.05 trillion for FY20, of which it has managed to garner only Rs 17,364 crore so far.
The government’s decision to slash corporate taxes to boost the economy and attract investments has left Finance Minister Nirmala Sitharaman struggling to meet the year’s fiscal deficit target despite receiving a Rs 1.76 trillion windfall from Reserve Bank of India.
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