Reforms, asset sales ‘on track’ — Modi govt confident Covid surge won’t hit budget decisions

Modi govt is of the view that 2nd Covid wave won't cause major economic disruption like it saw last year. Officials confident of Air India & BPCL sale 'in next few months'.

File photo of Union Finance Minister Nirmala Sitharaman | PTI

New Delhi: The Narendra Modi government is closely monitoring the implementation of all its budget announcements, including the ambitious plans on privatisation and asset monetisation, and is confident that these plans are “on track” even amid the pandemic.

The government is of the view that the second wave of the pandemic will not cause a major economic disruption, as seen last year during the first wave, two government officials told ThePrint.

The government is confident that the strategic sales of Air India and BPCL, both in their final stages, will sail through in the next few months, one of the officials said. While both the transactions may not be completed in the April-June quarter as initially envisaged, they will definitely be completed in the next few months, the official added.

The progress of the budget decisions is being constantly reviewed at multiple levels and with coordination across different ministries, said the second official.

This is a significant departure from the trend seen in previous years when many of the budget decisions are not implemented on the ground.

For instance, some of the government’s announcements in its previous budgets like borrowing in foreign currency from overseas markets, discussing with capital markets regulator Securities and Exchange Board of India (SEBI) to allow for 35 per cent public shareholding and selling government’s remaining stake in IDBI Bank have not been implemented.

Multi-level monitoring

This time, the Modi government is going all out to implement its budget decisions.

“Multi-level monitoring of important budget announcements is taking place led by the Prime Minister’s Office, Cabinet Secretary and by the respective minister in charge from the time the budget was announced in February,” said the first official quoted above.

“Be it disinvestment, asset monetisation, setting up of a development finance institution and the setting up of an asset reconstruction company, there is a significant thrust on delivering on the budget announcements and ensuring speedy inter-ministerial discussion,” the official said.

Speaking at an event jointly organised by the Financial Times and The Indian Express Thursday, Finance Minister Nirmala Sitharaman also said the pandemic is unlikely to impact the timelines set by the government for its reform measures. She added that one will have to wait and watch to gauge the impact of the pandemic on economic activities.

The targets

The 2021-22 Union Budget had set a Rs 1.75-lakh-crore disinvestment target, as against the previous fiscal’s initially budgeted target of Rs 2.1 lakh crore. The latter was subsequently revised downwards to Rs 32,000 crore as the onset of the pandemic and the subsequent lockdown forced the government to substantially reduce its aggressive targets.

This fiscal’s budget also laid out an aggressive framework for privatisation and the government’s plan to minimise its presence in strategic industries and completely exit non-strategic sectors.

Sectors like atomic energy, space and defence critical for national security, critical infrastructure sectors like transport and telecommunications; power and minerals important for energy security; and financial services have been classified as strategic sectors.

Besides BPCL and Air India, the firms that are lined up for being privatised include Shipping Corporation of India, Container Corporation of India, IDBI Bank, Bharat Earth Movers and Pawan Hans.

Two public sector banks and one general insurance company will also be taken up for privatisation in the current fiscal, according to the budget announcement.

The government had also announced a massive asset monetisation plan across several of its assets like oil and gas pipelines, road infrastructure assets, sports stadiums among others to garner revenues. The government is hoping to collect over Rs 2.5 lakh crore from asset monetisation over the next few years.