Here's how FinMin aims to meet its 4.8% fiscal deficit goal

The Indian Oil Corporation ( IOC ) divestment and improvement in tax collections will be music to the Finance Minister's ears as he fights to keep the fiscal deficit at 4.8 percent. Despite hitting 94 percent of the target in just 8 months, north block is confident of sticking to the fiscal deficit target.

Also read: IOC divestment likely on Thursday: Sources

One of the big lacunae is the Rs 54,000 crore divestment target. Sources in the finance ministry say that they have given an in-principle approval to cross holdings in various PSUs. Hence, it is likely that PSUs buy stake in each other, thereby giving the government some money.

The second part is special dividends. Coal India , for instance is going to give a dividend above Rs 15,000 crore. It is a special dividend that is and that will help government meet some of its target. The Indian Oil Corporation Limited (IOCL) issue is likely to get about Rs 6000 crore.

Apart from this the Hindustan Zinc ( HZL ) and BALCO stake sale will go through this year itself. In fact the Cabinet Committee on Economic Affairs (CCEA) is also expected to take that up over the next few weeks.

The stake sale in Axis Bank which forms part of the government Specified Undertaking of UTI (SUUTI) portfolio is also likely. Sources say this is likely to be a 12-13 percent stake sale and will take place next month.

With all these measures the government hopes to meet that Rs 54,000 crore disinvestment target.

As far as the slowdown in tax collections are concerned, there may have been some pickup. However, the point is that this is vis-à-vis a projected growth of 19 percent. So, it is far short of the projected target.

The government is likely to go ahead with expenditure cuts which we have reported before and these are likely to be to the tune of Rs 1,10,000 crore. The Finance Minister P Chidambaram said that due to elections, the country will see a slowdown in spending and that automatically would mean less expenditure.

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