On Saturday, Chief Economic Advisor KV Subramanian asserted that the disinvestment target of ₹1.75 lakh crore for 2021-22 was “imminently achievable”. He additionally stated that the proposed initial public offering (IPO) by LIC itself would significantly garner up to ₹1 lakh crore for the government. Thus, it would emphatically make the ambitious Rs. 1.75 lakh disinvestment target achievable.
He also added that retail inflation targeting by the Reserve Bank of India (RBI) has significantly helped in bringing down the volatility and level of inflation.
As it has been reported, RBI’s Monetary Policy Committee (MPC) has been mandated to maintain annual inflation at 4 percent until March 31, 2021, with an upper tolerance of 6 per cent and lower limit of 2 per cent. But it is to be also noted that RBI’s recent accommodative stance of keeping the interest rates low can breach the mandated annual inflation target, but at the moment MPC has been successful in maintaining the annual inflation rate.
Speaking at a virtual conference by Jana Small Finance Bank, Subramanian said the disinvestment target of ₹1.75 lakh crore for 2021-22 is actually the first step towards the ₹2.10 lakh crore target set for the current fiscal ending March 31.
Subramanian stated that “Of this, BPCL privatization and LIC listing itself were important contributors. There are estimates suggesting ₹75,000-80,000 crore or even higher can just come from the privatization of BPCL itself. LIC IPO could bring in ₹1 lakh crore approximately,”.
In nation’s biggest privatization till date, the government is set to sell its entire 52.98 per cent stake in BPCL. Reportedly, Vedanta Group and private equity firms Apollo Global and I Squared Capital’s Indian unit Think Gas have put in an expression of interest for buying the government’s stake.
Earlier this week, with regard to LIC’s listing, the government had also got amendments in the LIC Act passed through the Finance Bill 2021 in Parliament.
Subramanian maintained that “These are (disinvestment) numbers which are imminently achievable because the work had begun on many of these and they will be completed in FY’22,”
Recalling PM Modi’s statement on privatization, Subramanian maintained that these are signature changes that are happening in the economy. Last month, PM Modi had said that the government had no business to be in business and his administration was committed to privatize all PSUs barring the bare minimum in four strategic sectors. The recent privatization move by the government comes as Modi’s administration plans on increasing the efficiency of the PSUs and to raise its funding for its pro-growth budget that it unveiled in February.
Speaking on how banks can help unleash India’s growth potential, Subramanian stressed on India’s need for a lot more banks for meeting its growth potential. Citing an example of the US, he said America which has one-third the population of India and has about 25,000-30,000 banks.
CEA Subramanian, on the long-term growth story of India, said that the economy was expected to record double-digit growth next financial year. This analysis comes on the basis of an IMF report that predicted India’s economy to be the only economy to record a double-digit growth, followed closely by China.
According to Subramanian during 2022-23, it could moderate to 6.5-7 per cent and thereafter to 7.5-8 per cent, aided by the reform measures announced by the government recently.