The news report that the Government is pressing ahead with the disinvestment process in order to meet, and even exceed, the target of Rs 1.05 crores in the current financial year reflects the belated realisation that it may find hard to meet the steep revenue targets set for 2019-20. For, on closer examination of the budgetary statements of accounts and the numbers set for under each head of the tax collection, it does look well-nigh impossible for Nirmala Seetharaman to keep her word.
Several commentators have pointed out the rather ambitious revenue targets for 2019-20. The moot point that former Finance Minister P Chidambaram made during his intervention in the budget debate in the Rajya Sabha, last week, pertained to the huge mismatch between actual realisation under key revenue heads last year and unusually high targets for the current year. These do seem rather unrealistic unless a sputtering economic engine overnight becomes a Ferrari for GDP growth. Especially, when there is no reason to believe that growth deceleration has at last been halted and is now back on the positive trajectory. All four quarters of the last financial have seen the rate of growth slipping steadily, from eight per cent in the first quarter to a paltry 5.8 per cent in the January-March period. So, to expect a phenomenal increase in collections from income-tax, customs, even corporate tax despite a steep hike in surcharge this year, is highly unlikely.
Having said that, the disinvestment target mentioned above too will be hard to meet unless the Government in the remaining eight months of the current financial musters hitherto unseen energy and zeal. Hopefully, the sleight of hand in disinvestment seen under the Modi -1.0 when public sector financial entities such as LIC were made to pick up the equity share being divested will be scrupulously avoided. This is faux disinvestment, essentially reflecting an account entry, given that the government anyway controls the so-called disinvested entities through the State-owned financial entities. It would be immensely profitable for the proposed units being shortlisted for disinvestment by an inter-ministerial committee to consider an outright sale of some of the white elephants such as BSNL and MTNL, especially now that the social responsibility in these vital infrastructural sectors is being shared by the private companies.
The private sector can be obligatorily made to provide services in un-serviced rural markets. Stripping MTNL and BSNL of paying subsidies such as the cell towers and retaining the bare shell will make them unattractive for future disinvestment besides further spreading red ink in their balance sheets. Modi Government should shed its ideological opposition against disinvestment without fearing criticism from vested interests in the Opposition and the professional trade unions whose unconcern for the financial well-being is well-known so long as they continue to burden the public exchequer without taking the trouble to make them competitive to take on the professionally-run counterparts in the private sector.
Economic growth rather than a false fear of disapproval by the ordinary people of privatisation should animate the Modi Government’s disinvestment exercise.