THE INTERMINABLE LOOP

The Centre’s desperation for funds has never been more palpable. The clamour for a fiscal stimulus to revive the economy is only growing, and the government must also find the resources for substantial unbudgeted, yet unavoidable, expenditure on managing the Covid-19 pandemic. Strategic disinvestment in public sector enterprises, once again in the news, would have come to the rescue, but chances are the government will once again miss its overambitious Budget 2020-21 target of Rs 2.01 lakh crore.

- M.G. Arun

On the evidence of what it actually managed to raise in the previous fiscal (Rs 50,300 crore) against a Budget FY20 target of Rs 1.05 lakh crore (later scaled back to Rs 65,000 crore), the new target appears a pie in the sky. It was even panned by analysts as mere grandstanding, even more so because the market outlook on PSU stocks was far from bullish, and just did not support that kind of optimism. So, it looks unlikely the government will make a good fist of the Rs 2.01 lakh crore targeted disinvestments during FY21. It is also making its desperation all too plain by shifting deadlines for ‘expression of interest’ and tweaking criteria to interest potential private investors.

Take the case of Air India. The Centre had constituted a five-member ministerial panel, headed by the then finance minister Arun Jaitley, way back in 2017 to finalise the privatisation of the airline. A few investors did show interest, but baulked at the terms. The biggest stumbling block for potential investors was the airline’s gargantuan debt. As of March 31, 2019, Air India had a total debt of Rs 58,283 crore. Servicing that debt itself will entail an annual outgo of more than Rs 4,000 crore. The airline posted its highest-ever net loss of Rs 8,556 crore in 2018-19, compared with a net loss of Rs 5,348 crore in 2017-18.