FinMin bets big on 2G, stake sale to achieve fiscal consolidation plan

Even though the government's disinvestment plan is yet to kick off and spectrum auctions are projected to fetch lower-than-expected revenues, finance minister P Chidambaram is banking heavily on these two measures to achieve his fiscal consolidation plan for 2012-13.

Speaking to reporters here, Chidambaram expressed confidence in the government's ability to raise a combined Rs 70,000 crore from these two measures.

The government has budgeted Rs 40,000 crore from spectrum of 2G auction and another Rs 30,000 crore from disinvestment of government equity in PSUs.

"The government expects to realise the budgeted receipts under disinvestment and non tax receipts," Chidambaram said, adding that the department of disinvestment has obtained Cabinet approval for stake sales in eight firms, including Hindustan Copper, Nalco, SAIL, RINL, BHEL, OIL, MMTC and NMDC.

The ministry of mines has also circulated notes on disinvesting residual government stake in Hindustan Zinc and Balco, he said. The finance ministry is expected to soon give its comments and the matter will be taken up by the Cabinet. Chidambaram also stressed that the government will raise the targeted amount of Rs 40,000 crore from spectrum auction, but cautioned that revenue from refarming may be available only after two years.

Expressing confidence that the revised fiscal deficit target of 5.3 per cent as against the budgeted 5.1 per cent for the fiscal was 'doable', the finance minister laid out a five year fiscal consolidation plan (see chart) that would take in some suggestions of the Vijay Kelkar Committee on government finances.

He, however, indicated that the government has not taken a call on the panel's suggestion to monetise land resources of PSUs, gradually implement the Food Security Bill and fully deregulate diesel prices within a two year time frame to contain the deficit.

"The statement makes no reference to diesel prices..it is being dealt with separately," he said.

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