The government is on track to meet or exceed its ₹800 billion annual disinvestment and asset-monetisation target for the first time since FY2018-19, with the IDBI Bank sale expected to provide a major boost.
The fertiliser subsidy bill is now projected at ₹2.3 trillion, down from the earlier ₹3 trillion estimate, following a sharp fall in global urea prices.
Stronger-than-expected tax collections are providing additional fiscal support after the government absorbed ₹1.23 trillion in revenue losses from fuel excise duty cuts.
IDBI Bank Sale To Rescue India’s ₹800 Billion Asset Sale Target
India’s fiscal outlook is improving as the government moves closer to its ₹800 billion disinvestment and asset-monetisation target, helped by the proposed IDBI Bank sale, lower fertiliser costs and stronger tax collections
Summary
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India is on course to surpass its annual Rs 800bn ($8.4bn) disinvestment and asset-monetisation target for the first time since the 2018-19 financial year. The long-delayed privatisation of IDBI Bank will drive this milestone, Bloomberg reported.
An official announcement on the IDBI Bank deal is expected shortly, pending final regulatory approval. A spokesperson for the Ministry of Finance did not respond to a request for a comment.
This improved fiscal outlook marks a significant turnaround for the government. Earlier in the financial year, the economic fallout and energy shocks from the Iran war severely threatened India's budget calculations and fiscal math.
Fertilizer Costs Decline
The fertiliser and finance ministries have been in regular touch to discuss projections for the subsidy bill. The national fertiliser subsidy bill is now projected to fall to Rs 2.3trn ($24.1bn) for the fiscal year ending in March. This marks a sharp decline from April estimates of Rs 3trn, officials informed Bloomberg News.
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A 60 per cent collapse in global urea prices is largely responsible for the revised estimates. Prices have fallen from their April peak to below $400 per tonne in the latest tender.
Fertiliser subsidies currently account for 3.2 per cent of total government expenditure.
Supply constraints have also eased significantly. Russian President Vladimir Putin pledged this week to increase fertiliser shipments to India, securing necessary agricultural inputs for the country.
Stronger Tax Collections
Robust tax revenues are providing an additional financial buffer. Net tax revenue reached more than a fifth of full-year estimates in the June quarter, rising from 19 per cent a year earlier. Overall revenue receipts touched 28.7 per cent of the annual target, up from 26.9 per cent previously.
This revenue resilience cushions the budget against earlier energy-related losses.
In April, the government reduced fuel excise duties to shield consumers from surging costs, losing Rs 1.23trn ($12.9bn).
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By June, policymakers feared the fiscal deficit could widen to 4.8 per cent of gross domestic product, while reassuring ratings firms that any slippage would reflect global shocks rather than a retreat from fiscal discipline.
India is the world’s third-biggest oil importer but has proved less vulnerable to the Iran conflict than initially feared, weathering the oil shock without a sharp loss of momentum.
Official data expected on Monday is projected to show the economy grew 7.3 per cent in the last quarter, proving its broader resilience.