Coal India IPO May Help India to 'Take on' Keynes

Abstract

The response to Coal India IPO, from all the classes of investors, has surpassed even the most optimistic predictions. It has caught even the biggest optimists by surprise.This response can prove to be a big 'morale booster' for the Government's disinvestment program.Before the Coal India IPO, the disinvestment target for the financial year of Rs. 40,000 Crores was appearing little challenging. However, taking into account the tremendous response of Coal India IPO and the other PSU public issues in pipeline, its giving indication that the Government is well-on-its course to achieve the target. If all the things fall in place, the Government may even surpass the target of Rs. 40,000 Crores.The aggregate proceeds from the disinvestment can be expected to cross about Rs. 58,500 Crores. So, there is very good chance that the finance ministry may choose to make an upward revision to their disinvestment target of Rs. 40,000 Crores during the pre-budget estimate exercise.This is highly interesting considering the fact that most of the developed countries across the world, are facing the highest levels of deficits since World War - II, taking the shelter under the Keynesian model of 'deficit financing'. That is, increasing the deficits to provide the stimulus to the economy. They are literally running the balance sheets of 'war financing, without war'.However, India is maintaining a balance between the healthy economic growth and controlled deficit. If the Government could able to achieve the fiscal deficit levels lower than 5.5% , that can help in elevating the stature of Indian Government balance sheet in the eyes of the global investors.