Privatization to aid fiscal deficit is on full swing under the Modi government. What’s next?


After shaking the economy by deadliest acts in Indian history- Demonetization and GST, the Modi government slammed the economy leaving it to decline at the lowest point in the last 50 yrs. The people of India were left with nothing. Many committed suicide, businesses got shut, unemployment reached its highest point, people saw one of the worst scenes which still we remember to give goose bumps.

As an add-on- cases of bank breaches came into the limelight where people were deprived of their own hard-earned money. On one side, Indians were suffering from the misdeeds and on the other, our honorable Prime Minister was busy maintain good terms with other countries, attending events like Howdy Modi.

As a result, these demons showed India a fiscal deficit of 1.05 trillion. But the Modi government to overcome this introduced reduction in Corporate Tax rate from 30 to 20% to boost investment nature in the economy. According to the government, this will encourage people to invest but you cannot force anyone to invest his saved money. And this added a few more crores to the fiscal deficit number. It also lowered the tax rate for new manufacturing companies to 15% to attract foreign investment but this move dint worked well too.

Then it was selling minority stakes in public companies that yield only limited financial benefits due to low valuations of public sector companies which were also not a sufficient amount to face the massive fiscal deficit amount.

Then the Government decided to initiate the privatization of assets program. It is believed to drive big revenue to the government. Although there have been many companies that have been privatizing but these time companies were big fat brands.

In this, the government decided to sell its entire stake in the second-largest state refiner- Bharat Petroleum Corp and the largest shipping company, Shipping Corp. of India Ltd. It has also declared to sell control on 30.8% shareholding in Container Corp which has almost monopoly on railway freight. Along with them, Air India will also be put on sale and the government would pay for the airline’s hefty debt to make a sale attractive.  

Today the situation is that the government is dying to sell the second largest state refiner, and largest shipping company and trying every damn thing to get rid of Air India to compensate for fiscal deficit. 

As the present country’s situation, there is no guarantee that the government will be able to get the desired amount to compensate for the deficit. If this did not work then what’s next? 

Perhaps, more Indian brands will come under this privatization thing and soon or there be some other form of tax that will be taken from people to reduce the fiscal deficit. Or maybe some new form of demonetization is on the way.  

Shockingly, our government is ready to privatize the country’s assets but not ready to decrease its expenses.

Recently, the Modi government extended a $400 million line of credit and an additional $50 million to help combat terrorism, $ 100 million for solar projects in Sri Lanka. Besides this Rs 3000 crores spent on making the statue of liberty, 2021 crore spent on PM Modi’s foreign travel between 2014 and 2018. Financial aid of billions is given to many countries and here we need financial aid. 

Revenue from different sources

·     Rs 11 lakh crore oil tax revenue earned in 2014-2018

·     Rs 1.76 Crore revenue from surplus profits of RBI in FY19

·     Rs 400 Crore revenue from railways from 2017-2019 

·     Rs 95,380 Crore received as GST

·     Rs 9,187 Crore revenue from Toll Plaza in 2018-2019

·     502.7 Crore in 2017-18 earned from Delhi Metro.

Likewise, there are many other sources of revenue of government which are not commonly known. Where is this money going? Nobody has the answer. 

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