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IMF casts doubt on India meeting sell-off target

P Vaidyanathan Iyer in New Delhi

The International Monetary Fund has questioned the government's ability to meet the divestment target in the current financial year. The divestment receipts are budgeted at Rs 12,000 crore (Rs 120 billion) for 2002-03.

The IMF team today wrapped up its three-day assessment of India's macro-economic fundamentals.

According to finance ministry officials, while IMF has voiced concern over the revenue projections for the current fiscal, it has patted it for reining in the fiscal deficit.

Officials said, the IMF did not have many objections this time around since the macro economic numbers were strong.

The fiscal deficit of the Centre at the end of the first half of the current financial year was 40 per cent of the target (5.3 per cent of the gross domestic product), significantly lower than what it was in the corresponding period last year.

In 2001-02, it had crossed the 50 per cent mark, they said. Further, the government has effected greater transparency and predictability in its market borrowing programme by announcing half-year borrowing calendars, officials said.

As a percentage of the total borrowing target, this year's mop up from the market has also been lower at 68 per cent compared to about 74 per cent in the first half of the previous financial year.

The issue of revenue projections turning awry has often been raised by IMF in its country assessment under Article IV of its memorandum.

In 2001-02, the total revenue receipts were about Rs 19,500 crore (Rs 195 billion) less than the budget estimates.

This had led to the actual fiscal deficit rising to 6 per cent of the GDP.

This year too, the percentage growth in total tax revenue is pegged at 21 per cent while for direct taxes, the growth is projected at a hefty 33 per cent over the previous year's actuals.

Officials admit that the high growth in the first quarter has already slowed down and for the half-year ended September 2002, it was 17 per cent.

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