Budget 2019 expectations: Investors want focused disinvestment roadmap to meet fiscal deficit targets

On account of sluggish GST revenue collection and actual Indian fiscal deficit going beyond the targets of 3.5 percent of the Gross Domestic Product (GDP), the market experts have urged the Narendra Modi government to give a proper disinvestment plan when Finance Minister Arun Jaitley stands in parliament to present budget 2019 (though it won't be a full-fledged budget). Experts are of the opinion that the government is not going to meet its 3.5 percent fiscal deficit targets as it is falling short by around Rs 20,000 crore revenue collection from the GST.

When asked about the majors that the Indian government can take in this regard, Anindya Banerjee, Deputy Vice President, Kotak Securities told Zee Business Online, "The government should look more at the compliance than taxes. They have already curtailed taxes. If they further cut down taxes, the volume of the GST revenue would further get hit. Hence, it's time for them to focus on the avenue for revenue other than tax cut in GST." 

Asked about the steps that government should take to avoid this shortfall in GST revenue hitting the Indian economy Banerjee said, "They should try and give a proper road map for disinvestment as it is the only avenue that can create additional revenue for the government to meet the fiscal deficit targets in future."

He said that India need to generate additional money of around Rs 20,000 crore that they are trying to generate through FIIs but investors are not in mood to invest either in the bond market or in the equity markets. They want a proper road map from Indian government in this budget on disinvestment and economic reforms and its implementation too.

"Due to the sublime foreign investment, the Indian currency has been in bearish trend and is unable to sustain below Rs 70 per dollar mark.

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In fact, it has been falling for the last two month due to the concerns related to the government not meeting its fiscal deficit target and FIIs not in the mood to park their money in Indian markets," said Anindya Banerjee of the Kotak Securities.

For meeting the Fiscal Deficit target of 3.5 percent of the GDP, the Revenue collections should be in the range of around Rs 1.1 lakh crore while the actual collection is in between Rs 90,000 crore to Rs 95,000 crore — a shortfall of near Rs 20,000 crore.