How Southern States Can Help India Become $5 Trillion Economy? Panelists Discuss|Conclave South 2021
India’s efforts to privatize state-owned companies will move the country closer to becoming a $ 5 trillion economy, says one Indian business leader..
The government plans to cut investments of Rs 1.75 trillion (about $ 24 billion) for the next fiscal year, which begins April 1, the Treasury Secretary said this week. Nirmala Sitharaman (Nirmala Sitharaman) during budget unveiling.
This means that the government will sell public assets to the private sector or list them on the stock exchange..
This step will also include the completion of the privatizations of the country’s largest state-owned companies such as Air India, Container Corporation of India and Shipping Corporation of India, among many others. These actions will presumably lead to a proposal from the government to create two state-owned banks and a private insurance company..
«This is a very good step.», – said Anil Agarwal (Anil Agarwal), executive chairman of Vedanta Resources, a global diversified metals and mining company, on CNBC broadcast «Asia street signs» (Street Signs Asia).
He said the government’s efforts to sell shares would provide «a great opportunity for people all over the world to come and invest». He also added that this will increase the productivity of state-owned companies..
Last year, Agarwal teamed up with British investment firm Centricus to create a $ 10 billion fund to invest in state-owned companies for sale. Local media quoted him as saying that 5% of the fund is his own money, and the rest will come from investors..
Agarwal told CNBC that his investment fund received «huge response» from investors and that it aims to acquire 15% to 20% of state-owned companies for sale.
Companies that his fund is considering include state-owned oil and gas giant Bharat Petroleum Corporation, Shipping Corporation, Container Corporation and Hindustan Copper..
Agarwal said the fund will evaluate companies for sale, do the necessary due diligence, and determine where it can add value before making a purchase. He added that he expects a lot of competition in the battle to acquire these companies.. «This will definitely lead to a $ 5 trillion national economy.», – he said.
For the next fiscal year, India set a deficit target of 6.8% of its gross domestic product, more than double the levels it had planned before the coronavirus pandemic. According to economists, this highlights the shift in government strategy from stage "survival" to renewed growth.
According to Kaushika Dasa (Kaushik Das), Chief Economist at Deutsche Bank, India’s overall government revenue forecast and gross tax revenue growth projections look credible and likely to be met.
Investment cuts target of about 0.8% of GDP fell below market expectations, Das said in a recent post.. «It’s a smart strategy», – he added.
He explained that a significant divestiture deficit, as has been the case in the current fiscal year, could «it is easy to jeopardize fiscal arithmetic and lead to an unhealthy premium for uncertainty that will be continually accounted for by the markets».
Experts noted that with limited changes to the tax structure, the government will rely on stricter tax compliance and higher divestment revenues..
Das said the government’s ability to meet its investment cut target will also depend on a successful initial public offering of the state-owned insurance company Life Insurance Corporation of India..