Against the disinvestment target of Rs 40,000 crore, the government has so far managed to get Rs 1,144 crore from the stake sale in Power Finance Corporation. Although it has been forced to indefinitely postpone the ONGC follow-on offer in the face of volatile markets, officials said there was still hope of taking it to market by March as the public sector company's shares have not seen a steep decline.
But they admit that there is no clarity on other PSUs on the disinvestment list of the year - from Bhel to SAIL and IndianOil. "Disinvestment is tough this year," said a senior finance ministry official, who did not wish to be identified.
Similarly, there is no word on the Rs 15,000 crore that the government had budgeted from auction of spectrum in the current financial year. To begin with, the department of telecommunications was not too eager on the issue given the controversy surrounding the 2G scam. The finance ministry pushed hard but is now realising that spectrum across the country is not in the government's possession.
The shortfall is over and above the possible spike in spending due to higher-than-budgeted food, fertiliser and fuel subsidies. Finance ministry officials, however, say this problem can be handled since the payment of subsidy for the last quarter (January-March) can be postponed to next year.
In case of taxes, the ministry hopes to meet the indirect tax target despite the Rs 24,000 crore hit on its accounts due to a cut in duties on fuel. And officials are hopeful of exceeding the direct tax collection target. But this may not be sufficient to cover the Rs 50,000 crore gap. "I am sure the government would not like to give up so early in the day. We still have hope and will try to meet the targets as far as possible," he said.
On Tuesday, finance minister Pranab Mukherjee will deliver a stern message to financial advisors to stick to the allocations for the year and make sure that funds are disbursed only after utilisation certificates are received for the money released earlier. Besides, the finance ministry is hoping to impress upon ministries to save as much of their allocation as possible. "Even when there was no pressure, we managed to save Rs 20,000 crore. This year, we will try to increase it further," an official said.
Just like subsidies, officials indicated that ministries with large spending budgets such as defence and rural development would be advised to defer a part of their spending to the fourth quarter.
With the belt tightening moves, finance ministry hopes to meet its fiscal deficit target of 4.6% of gross domestic product set for the 2011-12 financial year. During an interaction with reporters in Tabriz, Iran, on Saturday, Mukherjee admitted that given the steep reduction target, sticking to the budgeted level may be tough. He, however, did not elaborate further.
Facing pressure on the targets, last month, the cash-strapped government said it would borrow nearly Rs 53,000 crore more than the budgeted level. The Centre will now borrow Rs 2.2 lakh crore between October and March compared to the original plan of Rs 1.67 lakh crore. The finance ministry official ruled out any further increase in its borrowing programme saying the ministry's austerity drive and strategy to rationalise spending should help it tide over the difficult situation.
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