Budget 2013: ICRA expects government to raise Rs 300 bn through disinvestment proceeds

NEW DELHI: Ratings agency ICRA expects the government to raise Rs 300 billion through disinvestment proceeds in the coming fiscal year.

The magnitude of disinvestment proceeds would depend on the timing of issues, valuation levels and market sentiment, said ICRA.

Following the decision of the Cabinet Committee on Economic Affairs, the disinvestment proceeds are to be credited to the National Investment Fund (NIF) in the public account. Thereafter, they can be used for various purposes including recapitalisation of PSU banks, added ICRA.

ICRA says that considering the inflexibility of committed expenses such as salaries, pensions and interest payments, the scope to restrain the growth of revenue expenditure appears limited.

Moreover, food subsidies are likely to expand on account of higher MSP and the increase in entitlements under the proposed NFSA. A likely decline in subsidy on non-urea products may help curtail fertiliser subsidies in 2013-14.

However, the spillover in release from FY13 to FY14 would need to be accommodated. Therefore, it is necessary to ensure that diesel prices are regularly revised by the OMCs in line with the government's recent directive, to minimise fuel subsidies, said ICRA.