The government acknowledged for the first time that it will fall short of the disinvestment target as it deferred the BPCL bid submission deadline for the fifth time, while retaining the annual borrowing target at the revised level of £120 billion. The Centre had originally budgeted to borrow £78 billion from the market during the current financial year but was forced to increase its bond issue programme as revenues dried up in the first quarter due to the coronavirus-induced lockdown. It has already borrowed around £77 billion so far this year. Economic affairs secretary Tarun Bajaj told reporters that the government has budgeted for a higher spending requirement and lower revenue and will disclose the details at the time of the Budget presentation in February. He added that the disinvestment department will try to maximise receipts, with less than £570 million of the £ 21 billion planned for the current year flowing into government coffers so far. The latest delay in the much touted BPCL sale also points to a further postponement of the Air India divestment.
Core sector shrinks for 6th month in row
Output from the country’s core sectors contracted for the sixth consecutive month in August as the pace of decline accelerated, dragged down by a contraction in six of the eight key sectors. Data released by the commerce and industry ministry showed the eight core sectors - spanning coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - contracted 8.5% in August, faster than the previous month’s revised 8% decline (was 9.6% earlier) and higher than the 0.2% fall recorded in August 2019. In May, June and July, the pace of contraction had narrowed as economic activity restarted across the country but the increase in the pace of decline in August surprised experts. Barring coal and fertilisers, all the six sectors contracted during the month. Coal sector output grew 3.6% in August, recovering from the 5.7% decline in the previous month, while the fertiliser sector rose 7.3% during the month, higher than the 6.9% recorded in the previous month. The robust activity in agriculture has sustained the expansion in the fertiliser sector for the past few months. The cement sector contracted by 14.6% during the month, while the refinery products segment fell 19.1% in August.
