Disinvestment process in focus, Govt targets Rs 30,000 crore mop up

Disinvestment process in focus, CAG report dampen investor sentiments; domestic bourses may rally on FII flows

Domestically, the government's Economic Survey had pegged GDP growth for fiscal year 2013 at 7.6%. Earlier, the Centre for Monitoring Indian Economy (CMIE) had also scaled down FY13 GDP growth forecast to 6.7% on poor monsoon.

According to C Rangarajan - Chairman of the PM's economic advisory council; fiscal deficit is likely to be 5.06% of the GDP, while current account deficit is expected to be 3.6% of the GDP. According to him, FY13-end inflation figure is expected to be 6.5-7%. The food inflation is expected to remain high in the coming months. In recent years the advisory panel has been optimistic about India's economic performance, and the revised forecasts are higher than estimates by private economists who now expect growth closer to 5.5% for 2012-13. The economic growth for FY12 may be higher than 6.5%.

To address the fiscal deficit woes, Finance Minister P Chidambaram has asked officials to expedite the process of disinvestment so that state-owned companies could hit stock markets in time and help the government achieve the target of Rs 30,000 crore in the current fiscal.

Meanwhile, three CAG reports focus on the alleged losses to the government because of violation of norms in allocation of coal blocks, the concession agreement and land given to DIAL, and award of UMPP to companies like Reliance Power and Tata Power. The CAG report states that allocation of coal blocks during the period from 2004 to 2009 was a bigger scam than 2G, and has pegged presumptive losses to the government on these allocations at Rs. 1.86 lakh crore for 17.40 billion tonne of coal. The CAG said 25 firms including Essar Power, Hindalco, Reliance Power, Tata Steel, Tata Power and JSPL were benefited from this coal blocks.

At the current level of 17691.08, the Sensex trades at a PE of 16x FY12E street earnings. Going ahead, markets would take a cue from the crop output from the present monsoon season, changes in rupee levels and behavior of crude oil prices.

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