The United States’ refusal to sign off on a higher quota for developing countries such as India in the International Monetary Fund (IMF) has given the government an opportunity to save . 14,000 crore that it had budgeted for this reform and use it for shoring up its fiscal deficit.
The government has been setting aside the sum for the past three years to pay for the higher quota at the multilateral agency that has been stalled as the US Congress has refused to ratify the IMF reform agreed to in 2010. “There are no signs of any breakthrough, so there will be no cash outgo of . 14,000 crore as budgeted,” said a senior official, adding that any increase in quota was unlikely before next year.
The reform seeks to increase the quota of developing countries in the IMF by six percentage points and also move two of the 24 directorships from European to developing countries. With the stalling of the reform, the government has got some leeway at a time when the finance ministry has ruthlessly cut expenditure to stay within its fiscal deficit target of 4.8% of GDP for 2013-14. The government had budgeted . 56,574 crore for investment in international financial institutions this fiscal. Of this, . 42,149 crore was to be met through issue of securities, or without any cash outgo. The additional saving will help the government rein in its fiscal deficit, which rose by November-end to . 5.1 lakh crore, or 94% of . 5.42 lakh crore estimated for the entire fiscal.
“The government should look at any opportunity that comes its way. Anything as a standalone may look like a small amount but such opportunities can make a serious contribution towards reining in the fiscal deficit,” said Sunil Sinha, principal economist at CRISIL Research.
The government is looking to plug all gaps to curtail its expenditure and find ways to shore up its revenues. It has already asked state-run companies to issue special dividends given that it has managed to raise only about . 3,000 crore with its disinvestment programme this fiscal.
“After Coal India, other public sector units will soon follow suit on specialdividends. The government is expected to raise around . 7,000 crore through its partial stake sale in Axis Bank,” an official said, adding that with some clarity on stake sale in Balco and Hindustan Zinc, the government would be easily able to garner revenues to meet the fiscal deficit target.
Source: The Economics Times
By: Dheeraj Tiwari
The government has been setting aside the sum for the past three years to pay for the higher quota at the multilateral agency that has been stalled as the US Congress has refused to ratify the IMF reform agreed to in 2010. “There are no signs of any breakthrough, so there will be no cash outgo of . 14,000 crore as budgeted,” said a senior official, adding that any increase in quota was unlikely before next year.
The reform seeks to increase the quota of developing countries in the IMF by six percentage points and also move two of the 24 directorships from European to developing countries. With the stalling of the reform, the government has got some leeway at a time when the finance ministry has ruthlessly cut expenditure to stay within its fiscal deficit target of 4.8% of GDP for 2013-14. The government had budgeted . 56,574 crore for investment in international financial institutions this fiscal. Of this, . 42,149 crore was to be met through issue of securities, or without any cash outgo. The additional saving will help the government rein in its fiscal deficit, which rose by November-end to . 5.1 lakh crore, or 94% of . 5.42 lakh crore estimated for the entire fiscal.
“The government should look at any opportunity that comes its way. Anything as a standalone may look like a small amount but such opportunities can make a serious contribution towards reining in the fiscal deficit,” said Sunil Sinha, principal economist at CRISIL Research.
The government is looking to plug all gaps to curtail its expenditure and find ways to shore up its revenues. It has already asked state-run companies to issue special dividends given that it has managed to raise only about . 3,000 crore with its disinvestment programme this fiscal.
“After Coal India, other public sector units will soon follow suit on specialdividends. The government is expected to raise around . 7,000 crore through its partial stake sale in Axis Bank,” an official said, adding that with some clarity on stake sale in Balco and Hindustan Zinc, the government would be easily able to garner revenues to meet the fiscal deficit target.
Source: The Economics Times
By: Dheeraj Tiwari
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