How credible is the asset sales target?

The government’s hopes of hitting the record asset sales target that has been set in the budget for FY19/20 appear to be dependent on the smooth sale of a large stake in Air India. That seems unlikely. The government may choose to deploy some creative accounting as it has in the recent past to paper over the resulting gap in its finances, or it could simply miss its target this year. Either way, the resulting deterioration in the underlying fiscal position is likely to put upward pressure on bond yields.