India to raise ₹1T from asset sales
mumbai — India’s government may look to raise as much as a record ₹1 trillion ($15.7 billion) from the sale of state assets in the next fiscal year to help meet tough fiscal deficit limits while giving it room to boost spending and woo voters before general elections that must be called by early 2019.
Investment bankers and economists expect the finance minister, Arun Jaitley, to set an ambitious target for the year beginning on April 1 following strong sales in the current fiscal year to the end of March.
The government is on track to raise about ₹925 billion this fiscal year after state-run ONGC, an upstream oil company, agreed to pay ₹369 billion to buy just over 51 per cent of refiner HPCL.
The deal is set to close this month and would take the government’s asset-sales tally beyond the budget goal of ₹725 billion, marking the first time in eight years that India had exceeded its targets.
The government accelerated asset sales in this current fiscal year after a chaotic rollout of a new national goods and services tax undermined tax collection targets. As part of a goal to gradually bring down the fiscal deficit, India’s government has set a target for the current fiscal year of limiting the deficit to 3.2 per cent of GDP and to 3 per cent for the upcoming year. Analysts say the government is likely to miss this year’s target and may also revise next year’s goal.
Buoyed by this year’s bumper sales and with India’s stock markets at record highs, market participants expect Jaitley to unveil an asset-sale target of between ₹600 billion and ₹1.2 trillion when he unveils the fiscal 2018/19 budget on February 1.
“Between this year and next year, I see them doing ₹2 trillion worth of divestments,” said a senior banker who has worked closely with India’s Department of Investment and Public Asset Management on stake sales. — Reuters