Reduced divestment target likely in FY13

Pranab hints at Rs 30,000 cr for next year, a fourth less than this year?s largely unmet aim, for which he blames the euro zone crisis

Just two days ahead of the presentation of the Union Budget for 2012-13, Finance Minister Pranab Mukherjee indicated in Parliament on Tuesday that the disinvestment target for the next financial year could be Rs 30,000 crore, as against Rs 40,000 crore each in 2010-11 and 2011-12.

Mukherjee said in the Rajya Sabha, “Indicative targets for PSU disinvestment for 2012-13 and 2013-14 are Rs 30,000 crore and Rs 25,000 crore, respectively, based on the projected figures in the Medium Term Fiscal Policy Statement of the Union Budget for 2011-12.”

Recalling the Rs 40,000-crore target for the current financial year, he said, “An uncertain global economic climate, mainly due to fallout of the euro zone crisis, has adversely affected financial markets and has been responsible for slowing down of PSU (public sector unit) disinvestment.”

Even with the recent auction of Oil and Natural Gas Corporation shares, the government has garnered only Rs 13,911 crore from disinvestment in 2011-12 till date. With the likely stake sale in National Buildings Construction Corporation slated this month, the total disinvestment money this year is expected to be around Rs 14,000 crore only.

Mukherjee said the unfolding of the euro zone sovereign debt crisis was being closely watched, for timely policy intervention. “Specifically, the sub-committee of the Financial Stability and Development Council (FSDC), chaired by the governor, RBI (Reserve Bank of India) is monitoring the situation,” he added.

Mukherjee stressed the general government debt was largely domestic and stood at 66.4 per cent of gross domestic product at the end of March 2011. This was much below the average of 99.7 per cent of GDP for advanced economies and 85.3 per cent for the euro area for 2010, as shown in the International Monetary Fund’s Fiscal Monitor Update, January 2012, he said.

In another reply, Minister of State for Finance Namo Narain Meena said the total of cash and bank balances with central public sector enterprises as on March 31, 2011, was Rs 2.84 lakh crore.

On whether the government was considering a proposal to raise the tax exemption limit to Rs 3 lakh of annual income, Minister of State for Finance S S Palanimanickam said various proposals had been received and the government’s response would be reflected in the Budget. On another question associated with the Supreme Court judgment in the Vodafone tax case, he said the verdict would have its effect on many similar, though not identical, cases.

He added, “Similar cases pending before various courts, or other appellate authorities include cases of Cairns UK Holding Ltd, Unilever HPC Finance Services Inc USA, Accenture Services Pvt Ltd, Euro Pacific Security Ltd, Tata Industries Ltd/AT&T, Mcleod Russel India Ltd, Sab Miller (A&A) and Sanofi Pasteur Holdings SA. In addition, there are similar cases under investigation and assessment.” He said the government had filed a review petition before the Supreme Court on the Vodafone verdict.