Though it is reassuring to hear the disinvestment secretary talking of identifying sick PSUs for sale, only a betting man would put his money on this given prime minister Modi’s view that PSUs can be turned around, if professionalised and given autonomy. Even so, it is unlikely this will stand in the way of disinvestment targets—this fetched R25,890 crore in FY13 and R25,841 crore in FY14. Indeed, with PSU shares rising dramatically in the post-Modi rally—the PSU index is up 45% since September 13, 2013—finance minister Arun Jaitley can hope to mop up even more money. And were the government to carry on with, say, the 50 paise monthly diesel price hike and, say, a token R100 LPG hike in 2-3 phases, this would reduce the oil marketing companies’ share of subsidies by around R23,000 crore—post-taxation, that’s a R1.6 lakh crore hike in their market cap; a neat little bonus for Jaitley, depending on how much of the equity he divests.
Though finance ministry bureaucrats have, news reports suggest, told Jaitley there is nothing to the news reports that his predecessor left him with unpaid bills of R1 lakh crore, the finance minister would do well to delve deeper into the matter. P Chidambaram, it is true, also inherited unpaid bills ... the point, however, is that the quantum of unpaid bills is rising over the past 3-4 years. Jaitley would do well to keep a close tab on the tax projections for the year as ministry officials habitually overstate them. In FY13, for instance, an 21.2% hike was budgeted for against the actual growth of 16.5% despite knowing economic growth was going to be poor. In FY14, though there was no hope of growth picking up, a 19.3% hike was budgeted for and, not surprisingly, collections rose only 11.8%.
Fortunately for the FM, apart from the huge savings he can make—R60,000 crore—if he can somehow convince the government to stop FCI’s unlimited purchases, there are other pots of gold. Just moving on the sale of the government’s residual sale of HZL and Balco can fetch at least R20,000 crore. The share of L&T, Axis Bank and ITC held by SUUTI can be easily sold and can fetch R50,000 crore. For reasons that were never clear, the UPA was reluctant to sell SUUTI shares though holding them is of no conceivable utility to the government. And if Jaitley is able to