India's Finance Secretary TV Somanathan confirmed that the government’s proposed divestment plan for the Life Insurance Corporation (LIC) of India would be completed between March and June 2022.
He said that the government’s stake sale in Air India and Bharat Petroleum Corporation Limited (BPCL) will likely be completed this fiscal year, especially as AI's divestment is in an “advanced stage”.
“I think the Air India disinvestment is likely to happen. It is in a very advanced stage. The LIC disinvestment is almost certain to happen. The timeline it will happen in is somewhere between March and June — but it is almost certain to happen,” said Somanathan, speaking to the media in Chennai, after addressing an audience at the Madras School of Economics.
Proposed divestments in Container Corporation of India (CONCOR), the finance secretary said, would take place in the next fiscal year owing to “one or two issues”, without elaborating further.
“Air India (divestment) is most likely this year — it’s almost certain, LIC (divestment) is very likely, BPCL (divestment) is likely, and CONCOR is unlikely in this financial year,” Somanathan reiterated, adding, “But almost all of them (divestments) are likely to happen in the next financial year.”
‘No tax-cuts owing to increasing expenditure’
The finance secretary’s confirmation of the government’s timeline for divestments came in the context of his defence of higher taxation in the face of growing expenditure. He added that there was no scope of any tax-cuts this financial year.
“I don’t think tax rates are going to be cut any further this fiscal year,” said Somanathan, speaking to reporters. “I know a lot of people have perennial expectations of tax-cuts," he said, adding, "I don’t think anything will come.”
Somanathan said that less attention was paid to the government’s escalating expenditure requirements, while the focus continues to remain on higher taxation. “We see tax revenue coming in, and we keep opening the tap also,” he said. “But the opening of the tap is less visible and the pouring in of revenue is focused on.”
Expenditures like Rs 1 lakh crore on food subsidies, Rs 20,000 crore on fertilizer subsidies, Rs 15,000 crore on the Emergency Health Response Fund to states and Rs 56,000 crore of MEIS/SEIS arrears, Somanathan said, are right atop the government’s list of big spends this fiscal. “That is Rs 2 lakh crore of extra expenditure that is already in the pipeline,” he added. “So, it is not as if tax revenue is jumping and expenditure is stagnant.”