Meeting fiscal targets

30 DEC,2021 | MEDC


 

As Covid-related public spending starts rising, doubts are being expressed over whether the government will be able to meet the Budget provisions of reigning in the fiscal deficit at 6.8% of GDP. Most economists expect a slippage of about 0.5-0.7 percentage points of GDP this fiscal year. The silver lining is that if the disinvestment target of Rs. 1.75 trillion for FY22 is achieved, the fiscal deficit target can be met. But for that, the initial public offering (IPO) of the LIC and the privatization of Bharat Petroleum Corporation (BPCL) will need to speedily materialize. The valuation of most public-sector assets is a complex process due to their size, product mix, real estate assets, subsidiaries and the profitability sharing structures that characterise them. However, limited options are now available. Policymakers must act decisively, as only slightly more than three months remain for the fiscal year to end.

*Photo Credit: Google

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