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Government to miss disinvestment target - Views on News from Equitymaster
 
 
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  • Jan 28, 2000

    Government to miss disinvestment target

    The Finance Minister has stated that the government would not be able to meet the disinvestment target of Rs 100 bn for fiscal 2000. This has been reported by a leading national daily. This news will definitely not come as a surprise to those who are familiar with the government's track record in the disinvestment process.

    The government had projected a fiscal deficit of Rs 800 bn (excluding small savings) for FY00 after having accounted for receipts of Rs 100 bn from the disinvestment process. So far the collections have been meagre. Added to this is the burden of increased subsidies on account of the rise in crude prices. Finally, a surge in defence expenditure has further worsened the fiscal position of the government.

    The finance minister has stated that he would not be factoring in receipts from this source in the budget for FY01.

    Another concern that the government needs to tackle is the low net tax GDP ratio (FY99 6%). The government had proposed to increase this ratio to 7% in FY00 but this seems unlikely in view of the slower growth in tax mobilisations. In developed countries the tax GDP ratio is much higher. For example in Germany the ratio is 42%. There is thus a large scope from the point of view of raising tax revenue in India.

     

     

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