Back to piecemeal sales

INTERIM BUDGET & THE GOVERNMENT/DISINVESTMENT

From a near-complete collapse in the middle of this year with internal opposition, and the Congress party, putting paid to the its plans to sell off both petroleum majors HPCL (to a strategic buyer) and BPCL (through an IPO), the government has managed to claw its way back on the disinvestment front.

Indeed, thanks to a policy of reverting to piecemeal sales of blue chip PSU shares (primarily ONGC), the government has even increased its original budgeted target of Rs 13,200 crore to Rs 14,500 crore.

The ONGC stake sale is expected to be complete by the end of March, and the total collections from disinvestment so far have been only 1,335 crore.

To meet the highly optimistic fiscal deficit target, finance minister Jaswant Singh has raised the disinvestment target for the next fiscal to Rs 16,000 crore. This represents a jump of 10.35 per cent over the revised estimate for 2003-04.

However with the logjam on strategic sale continuing, it is on the cards that the Centre will again dip into the coffers of the oil companies to meet the target.

The government hopes to rake in Rs 13,165 crore from the initial public offering of 10 per cent equity each of Oil and Natural Gas Corporation and Gail (India) Ltd and 20 per cent equity of Dredging Corporation of India and book-built market issues of its residual stake in IBP, IPCL and CMC. All the six issues are expected to hit the market before close of the fiscal, beginning with IBP in mid February.

The non debt capital receipts of the government has swelled to 79,125 crore thanks to the expected disinvestment receipts and the parking of the debt pre-payment made by the states in the National Small Savings Fund.

In the next fiscal too the Centre expects to earn besides Rs 16,000 crore a similar sum through recovery of high cost loans from state governments.

The recovery of such loans during the current fiscal is pegged at Rs 46,022 crore, compared to the original target of Rs 18,023 crore.

The budget estimate for 2004-05 for recovery of loans has been kept at Rs 14,100 crore, which is exclusive of such debt pre-payment.

Because of the debt swap, the Centre has lowered the target for market borrowings in 2003-04 by 22.6 per cent to Rs 82,982 crore. The next fiscal's borrowings are budgeted at Rs 90,502 crore.