Centre pins hopes on spectrum auction, divestment in Q4 to meet fiscal target

NEW DELHI: The finance ministry hopes the last quarter of the fiscal will see an improvement in finances, after the figures for November showed fiscal deficit at close to full-year estimates and exacerbated concerns that the target for 2014-15 will not be met.

Revenues from spectrum auction and disinvestment are due in the final three months, a finance ministry official pointed out, but admitted a cut in plan spending cannot be avoided.

Estimates suggest that if successful the spectrum auction, the base price for which was announced last Wednesday, can fetch the government about a third of Rs 1.2 lakh crore this fiscal.

Disinvestment is also expected to pick up pace to reach closer to the target ofRs 58,000 crore. So far, the government has managed only about Rs 1,700 crore.

The last quarter typically accounts for about 50% of tax revenues. With the government choosing not to extend excise duty concessions to auto and white goods sectors that lapsed on December 31, additional revenue can be expected on this account as well.

“Achieving 4.1% of GDP target would require sharp spend cuts, delayed payments (tax refunds) and higher dividends from PSUs in the next three months,” Nomura economist Sonal Varma said.