The high case of COVID-19, forced the Indian Prime Minister, Narenda Modi, to find a strategy to cover the budget deficit of his government, which was feared to swell in this year - Photo by PTI

JAKARTA (TheInsiderStories) – The high case of COVID-19, forced the Indian Prime Minister, Narenda Modi, to find a strategy to cover the budget deficit of his government, which was feared to swell in this year. The latest reports says, the country plans to release its two state-owned companies, namely Coal India and IDBI Bank.

Coal India is one of the largest coal producers in the world, while IDBI Bank is the largest shareholder held by Life Insurance Corporation of India (LIC India), a state-owned insurance company whose shares are 100 percent owned by the Indian government. According to the global news, Indian government is expected to get fresh funds worth 200 billion rupees (US$2.66 billion) through the sale of the two state-owned firms.

Last year, LIC India bought 51 percent of IDBI Bank shares, making the Indian government hold a share of around 47 percent. Meanwhile, the country also holds more than 66 percent of Coal India’ shares. Previously, Modi‘ administration had sold 10 percent of Coal India shares in January 2015, and raised funds of up to 225.5 billion Rupees.

Early February, he announced a plans to raise 2.1 trillion rupees by selling state assets to maintain the budget deficit at 3.5 percent of gross domestic product (GDP) due to the effects of the COVID-19 pandemic. Johns Hopkins University revealed, until Friday morning, the number of positive cases in India had reached 767,296 people and caused 21,129 people to die.

India ranks third in the world after the United States (3.12 million cases) and Brazil (1.76 million cases). The country in the South Asian region even shifted Russia to third place (706,240 cases).

The International Monetary Fund predicts that public debt in India will rise to 85.7 percent of GDP next year from currently around 70 percent of GDP. While, Fitch Ratings also revised down India’ outlook to BBB- from stable to negative, stating that the pandemic has significantly weakened this year’ economic growth prospects and exposed the challenges associated with a high public-debt burden.

The economic activity of India to contract by 5 percent in the fiscal year ending on March 2021 due to the strict lockdown measures imposed since March 25, before rebounding by 9.5 per cent in 2022.

The coronavirus pandemic has significantly weakened the country’ growth outlook for this year and exposed the challenges associated with a high public-debt burden. The rebound will mainly be driven by a low-base effect.

Rupee 1: US$75.15

Written by Editorial Staff, Email: theinsiderstories@gmail.com