{"id":48852,"date":"2019-07-04T19:00:44","date_gmt":"2019-07-04T13:30:44","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=48852"},"modified":"2019-07-04T17:46:09","modified_gmt":"2019-07-04T12:16:09","slug":"7-pm-state-assets-sales-could-play-the-fiscal-saviour-4th-july-2019","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-state-assets-sales-could-play-the-fiscal-saviour-4th-july-2019\/","title":{"rendered":"7 PM | State assets sales could play the fiscal saviour | 4th July, 2019"},"content":{"rendered":"\n<p><strong><a href=\"https:\/\/drive.google.com\/open?id=1YUdH1JpIVI4SuwKhEp7DXYuZwMTYAF8Y\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Read\u00a0In-depth analysis of all the Editorials here (opens in a new tab)\">Read\u00a0In-depth analysis of all the Editorials here<\/a><\/strong><\/p>\n\n\n\n<p><strong>Context:<\/strong>\nDisinvestment can be a viable solution to fund for raising public expenditure.<\/p>\n\n\n\n<p><strong>Disinvestment:<\/strong> Since the beginning of 1980s, a large number of public enterprises\nincurred losses year after year, and it was argued that the state should not be\ncalled upon to meet the losses of these enterprises out of tax payer\u2019s money. Consequently\ngovernment started disinvestment. Disinvestment is the process through which\nprivatization could take place.<\/p>\n\n\n\n<p><strong>Primary objectives of disinvestment:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Releasing the\nlarge number of resources locked up in non-strategic public sector enterprises\n(PSEs), and redeployment of the resources for social priority areas like\nhealth, family welfare, and primary education, social and economic\ninfrastructure.<\/li><li>Reducing the\npublic debt.<\/li><\/ul>\n\n\n\n<p><strong>Evolution of disinvestment policy:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Industrial statement of 24<sup>th<\/sup> july 1991: stated that the government would divest part of its holdings in selected PSEs.<\/li><li>Rangarajan committee on disinvestment (1993): committee stated that the percentage of equity to be divested could be upto 49% for industries explicitly reserved for the public sector.<\/li><li>On 16<sup>th<\/sup> march 1999, the government classified PSEs into strategic and non-strategic areas for the purpose of disinvestment.<\/li><li>Disinvestment policy since November, 2009: <ul><li>Offer for sale for listed profitable CPSEs.<\/li><li>Follow-on public orders in respect of profitable CPSEs having 10% or higher public ownership.<\/li><li>Disinvestment is to be considered on merits and on a case by case basis.<\/li><\/ul><\/li><\/ul>\n\n\n\n<p><strong>Need of disinvestment: <\/strong>In the present economic scenario, demand for expenditure is increasing,\nat the same time the supply of resources is not promising.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Goods and\nService Tax (GST) collections: As per\nthe interim budget, the government revised the GST target from rs.7.44 lakh\ncrore to Rs. 6.44 lakh crore due to short fall in collections. So the standard\ncollections from GST will take time.<\/li><li>Directtax collection: By march 2019, Central Board of Direct Taxes (CBDT)\nstated that the tax collection figures have been reviewed and it is seen that\nas against the budget collection target of Rs. 12 lakh crore, only 85.1% of the\ntarget at Rs. 10,21,251 crore.<\/li><li>Central\ngovernment notified to extend the benefit of Rs. 6000 per year under the Pradhan\nMantri Kisan Sammaan Nidhi (PM-KISAN) to all 14.5 crore farmers\nirrespective of the size of their land holdings which need Rs. 75,000 crore.<\/li><li>Borrowings: The net borrowings of government already stands at\nRs. 4.7 trillion in Fiscal Year 2019-20, further borrowings will increase the\ninterest rates on government yields, which will have impact on debt market.<\/li><li>Rising defence\nexpenditure (more than Rs. 3 lakh crore in 2019-20) and increasing health\nexpenditure (Ayushman Bharat Scheme) from Rs. 52,800 crore in 2018-19 to Rs.\n61,398 crore in 2019-20.<\/li><\/ul>\n\n\n\n<p><strong>Performance of disinvestment in recent scenario: <\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>According to\ndepartment of investment and public asset management, between 2004-05 to\n2013-14, disinvestment raised Rs. 1.07 lakh crore, on an average yearly\ncollection of Rs. 10,700 crore.<\/li><li>However, from 2014-15\nto 2017-18, the collection went up to Rs. 2.12 lakh crore, i.e. yearly\ncollection of Rs. 53,000 crore.<\/li><li>The government\nhas exceeded the target of Rs. 1 lakh crore in 2017-18 and Rs. 80,000 crore in\n2018-19. <\/li><li>Success of\nBHARAT-22 Exchange Traded Funds (ETF) takes government closer to disinvestment\ntarget. The ETF is benchmark to an index named BHARAT22 consisting of 22\ncompanies (19 PSEs and 3 private). <\/li><\/ul>\n\n\n\n<p>The collection and performance above shows that the disinvestment is a\nviable option to raise funds.<\/p>\n\n\n\n<p><strong>Future disinvestment potential:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Recently cabinet\nhad approved an institutional framework for monetisation of non-core assets of\nCPSEs under strategic disinvestment. The government should expedite this\ninitiative and realise the disinvestment potential locked in this sector.<\/li><li>Even though\ngovernment is committed for sale of Air India, but there are some strings\nattached to Air India sale. The government should focus on lessening the\nstrings and create a viable option for both the state and purchaser. <\/li><li>High value\nassets: There are vast tracts of land in big cities held by government wings\nsuch as armed forces (Example, Secunderabad Cantonment area), railways, and in\nmetro-Politian areas. Government should monetise these land assets and use for\ncommercial purpose, which will be an evergreen income resource for government.<\/li><li>With the success\nof BHARAT22 ETF, government should promote further disinvestment of PSEs and\nbring more of them under BHARAT22.<\/li><\/ul>\n\n\n\n<p><strong>Way Forward: <\/strong><\/p>\n\n\n\n<p>Disinvestment is present context can provide solution to the raising of\nfunds, but in the long run,&nbsp; government\nshould focus on raising the resources from tax receipts-direct and indirect\ntaxes and keep a balance between tax resource and disinvestment proceedings to\nfund the public expenditure.<\/p>\n\n\n\n<p>Source: <a href=\"https:\/\/www.livemint.com\/opinion\/online-views\/opinion-state-asset-sales-could-play-the-fiscal-saviour-1562174648371.html\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">https:\/\/www.livemint.com\/opinion\/online-views\/opinion-state-asset-sales-could-play-the-fiscal-saviour-1562174648371.html<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Read\u00a0In-depth analysis of all the Editorials here Context: Disinvestment can be a viable solution to fund for raising public expenditure. Disinvestment: Since the beginning of 1980s, a large number of public enterprises incurred losses year after year, and it was argued that the state should not be called upon to meet the losses of these&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-state-assets-sales-could-play-the-fiscal-saviour-4th-july-2019\/\">Continue reading <span class=\"screen-reader-text\">7 PM | State assets sales could play the fiscal saviour | 4th July, 2019<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":3567,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130],"tags":[],"class_list":["post-48852","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-7-pm","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2017\/07\/brief-image.jpg?fit=1000%2C500&ssl=1","views":{"total":0,"cached_at":"","cached_date":1704849155},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/48852","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=48852"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/48852\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/3567"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=48852"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=48852"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=48852"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}