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Budget'02: A reassessment... - Views on News from Equitymaster
 
 
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  • Aug 31, 2001

    Budget'02: A reassessment...

    What if you were to demand from the government a half yearly review of Budget'02? A review of some important announcements in the budget that collectively made us believe it was a dream one.

    Obviously, it is case of over promise and under deliver, atleast till date. Another 6 months to go, before the finance minister presents new budget with a justification for unmet targets.

    Let's take something, which is quite obvious, the divestment target of the government. The government has put an ambitious revenue target of Rs 120 bn from divestment in the current year. However, it is unlikely to be met! Ministries are still exchanging files and angry notes in an attempt to somehow delay the divestment process. For the potential bidders the signal that the government is sending out is nothing but confusion and uncertainty. The frustration of bidders finally giving up to the whole process is quite evident on Mr. Arun Shourie's face.

    The government has promised complete de-control of oil and gas sector by March'02. Six months to go and there is no agenda from the government's side. It's anybody's guess right now what the decontrol would exactly mean for petroleum companies. Whether cross subsidization for kerosene and LPG would continue? Whether all refineries would be able to hedge their oil requirements? Whether PSU refineries can actually decide their own product mix without any interference? Whether marketing companies can actually expect a spurt in margins? The government is already finding a hard time to finance the oil pool deficit. Even a broad picture is not clear at this point of time.

    Talk about pharma industry's much awaited demand for DPCO dilution. The government had promised to bring down drastically the DPCO coverage from the current 77 drugs under its control. No clear guidelines till date. What about the fast track power sector reforms announced to trim down T&D losses? Most of our industry stalwarts gave a thumps up when the minister announced his initiatives for labour reforms. Nothing concrete on that yet.

    To be fair it is not as if the government has not met with any targets. The deficit management of the government seems to be fairly good, if indications are to be believed. The foreign exchange reserve and the import bill (in the backdrop of widening the OGL list) seem to be quite satisfactory.

    However, the government has to meet lot of expectations before the budget actually turns out to be a dream one. A mid year correction of railway fares only indicates that the railway budget with no fare hike was just not achievable. We can just hope that Mr. Yashwant Sinha doesn't have to give much explanation before he presents his next budget.

     

     

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