Friday, February 26, 2021
  • About
  • Advertise
  • Careers
Scoftware Magazine
  • Home
  • Politics
  • Business
  • Culture
  • Opinion
  • Lifestyle
  • Entertainment
  • Login
No Result
View All Result
Scoftware Magazine
Home Business

Union Budget 2021: Govt needs to pursue disinvestment seriously next fiscal, else it may be a flop show again

Jaleel M. by Jaleel M.
January 21, 2021
in Business
0
Union Budget 2021: Govt needs to pursue disinvestment seriously next fiscal, else it may be a flop show again
0
SHARES
8
VIEWS
Share on FacebookShare on Twitter


Unlike 2020-21, the government cannot afford for disinvestments to be a flop-show in 2021-22 as well.

Related posts

Market roundup: Sensex falls to 49,099.99, Nifty settles at 14,529.15 amid sell-off before release of Dec GDP data

Market roundup: Sensex falls to 49,099.99, Nifty settles at 14,529.15 amid sell-off before release of Dec GDP data

February 26, 2021
Sensex tanks over 1,000 points in opening trade; Nifty slips below 14,900

Sensex tanks over 1,000 points in opening trade; Nifty slips below 14,900

February 26, 2021

It is that time of the year when a small scale industry advising the finance minister what to do in the Budget, emerges. This year has been no different on that front. In fact, due to the negative economic impact of the COVID-19 pandemic, the industry has only become bigger.

But one thing that economists, analysts and journalists, advising the finance minister tend to forget is that the Budget more than anything else is ultimately a presentation of the accounts of the government for the next financial year. This basic factor needs to be kept in mind. Hence, the numbers need to add up. The expenditure that the government plans to incur during a year should reliably match with the revenue it plans to earn to finance it.

Disinvestment of PSEs

Take the case of 2020-21, the current financial year. The government had planned to raise Rs 2.1 lakh crore through the disinvestment of public sector enterprises during the year. This would involve the government selling its stake in public sector enterprises to the general public, institutional investors and/or other private or government companies.

Of this, nearly Rs 90,000 crore was supposed to be raised through disinvestment of the government’s stake in public sector banks and financial institutions. A bulk of this money was planned to be raised by disinvesting a part of the government’s stake in the Life Insurance Corporation (LIC) of India.

Until November 2020, the government had managed to earn a total of Rs 6,179 crore through the disinvestment route. This is around 3 percent of the targeted Rs 2.1 lakh crore. Of course, one reason for the slow disinvestment of public sector enterprises has been the spread of the pandemic.

While that could have been an excuse for the first half of the financial year when things were tough, the same cannot be true for the second half of the year after things have eased out a little. Also, the stock market has rallied to all-time
high levels and the BSE Sensex, India’s premier stock market index, has touched 50,000 points.

Delays to get LIC for disinvestment

Another reason for the slow disinvestment has been the fact that the government needs to get LIC ready for disinvestment, and that has been taking the time. Hence, the lesser than expected disinvestment receipts has made things difficult for the government this year, especially when one takes into account the fact that gross tax revenues between April and November 2020 have been at Rs 10.26 lakh crore, 12.6 percent lower than last year.

In fact, even this has been possible primarily because of a massive increase in excise duty collections, which have gone up by 47 percent to Rs 1.96 lakh crore.

This has primarily been on account of the government not passing on the fall in oil prices to people in the form of lower petrol and diesel prices.

The excise duty on petrol and diesel has been increased during the course of the year to bolster government finances. If we leave excise duty out of the gross tax revenue, the gross tax revenue this year has been around 20 percent lower than last year. While tax collections next year will improve, they will not improve to a level which can finance the spending ambitions of the government. In this scenario, the disinvestment receipts become very important.

Disinvestments need to take-off soon

Unlike 2020-21, the government cannot afford for disinvestments to be a flop-show in 2021-22 as well. Also, the disinvestment process needs to take-off quickly to take advantage of the bull market that is currently on in stocks. There is no guarantee that it will last all through the next financial year and if doesn’t, it will make the disinvestment process even more difficult for the government. And that will have an impact on the government’s ability to spend.

The government needs to look at other innovative ways of raising revenue as well. The government, through its various agencies and central public sector enterprises, is sitting on a lot of land, across some of the biggest Indian cities.

At the same time, most cities battle with a shortage of land, unless they continue expanding in all directions. Hence, it might make some sense to start selling some of this land and raising revenue. The other option is to give the land back to the state governments so that they can do something useful with it.

These are some steps that the government and the finance minister can take in the Budget which is to be presented on 1 February. It will make things easier for the government on the revenue front next year.

The writer is the author of Bad Money.

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.



Source link

Previous Post

Union Budget 2021: Increase FDI cap to digital media from 26% to 49% to create level playing field, attract foreign investment

Next Post

Union Budget 2021: Hope Nirmala Sitharaman is able to reverse economic downturn caused by COVID-19

Next Post
Union Budget 2021: Hope Nirmala Sitharaman is able to reverse economic downturn caused by COVID-19

Union Budget 2021: Hope Nirmala Sitharaman is able to reverse economic downturn caused by COVID-19

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

RECOMMENDED NEWS

Just Charlii returns with soulful new single ‘Vibe Wimme’

Just Charlii returns with soulful new single ‘Vibe Wimme’

7 months ago
SC grants interim bail to Unitech promoter Sanjay Chandra after his parents test positive for coronavirus

SC grants interim bail to Unitech promoter Sanjay Chandra after his parents test positive for coronavirus

8 months ago
SOUND TALENT GROUP LAUNCHES SOUND TALENT MEDIA PODCAST NETWORK

SOUND TALENT GROUP LAUNCHES SOUND TALENT MEDIA PODCAST NETWORK

6 months ago
Kendall and Kylie Jenner’s Makeup Collab Will Have Your Glam Needs Covered

Kendall and Kylie Jenner’s Makeup Collab Will Have Your Glam Needs Covered

8 months ago

FOLLOW US

  • 81 Followers
  • 29.5k Followers
  • 103k Subscribers

BROWSE BY CATEGORIES

  • Business
  • Culture
  • Entertainment
  • Lifestyle
  • Music
  • National
  • News
  • Opinion
  • Politics
  • Sports
  • Tech
  • Travel
  • World News

BROWSE BY TOPICS

2018 League Balinese Culture Bali United Budget Travel Champions League Chopper Bike Doctor Terawan Istana Negara Market Stories National Exam Visit Bali

POPULAR NEWS

  • Kris Jenner Spills Details About Her Sex Life With Corey Gamble: Watch

    Kris Jenner Spills Details About Her Sex Life With Corey Gamble: Watch

    0 shares
    Share 0 Tweet 0
  • Common Saints Release New Single “Idol Eyes”

    0 shares
    Share 0 Tweet 0
  • Sam Heughan & Graham McTavish Are Men in Kilts for Travel Show

    0 shares
    Share 0 Tweet 0
  • KRISTIN LASH & JAKOB GREY Team Up On “Sleeping With The Lights On”

    0 shares
    Share 0 Tweet 0
  • A Blackhat Hacker Durgesh Singh Kushwah Tells Us All!

    0 shares
    Share 0 Tweet 0
  • About
  • Advertise
  • Careers

© 2020 Scoftware.com

No Result
View All Result
  • Home
  • Politics
  • Business
  • Culture
  • National
  • Sports
  • Lifestyle
  • Travel
  • Opinion

© 2020 Scoftware.com

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Terms and Conditions - Privacy Policy