Govt deficit soars 20% in Apr-Nov

Govt deficit soars 20% in Apr-Nov
ENS ECONOMIC BUREAU

NEW DELHI, JANUARY 3: The Union government's fiscal deficit during April-November (1999-2000) has gone up by more than 20 per cent on account of surge in expenditure and low realisation from the sale of public sector shares. Tax collection too has remained subdued during the period.

At the end of the eighth month in the current fiscal, the government has run a fiscal deficit of Rs 64,459 crore, which is more than 80 per cent of the amount of Rs 79,955 crore earmarked for 1999-2000 in the budget. Taking into account the small savings collection of Rs 18,507 crore during April-November 1999, the fiscal deficit would surge to Rs 82,966 crore. This would be 20.25 higher than the fiscal deficit of Rs 68,993 crore recorded during the corresponding period in the last financial year.

As far as net tax revenue is concerned, the net realisation during the first seven month was only Rs 62,649 crore as against the full year target of Rs 132,365 crore. This works out to be about 47.5 per cent of the target. Ascompared to the corresponding period last year, the net tax revenue was up by 9.31 per cent as opposed to the annual target of about 13.27 per cent.

The government, at the end of eighth months in the fiscal, has run a very high revenue deficit totalling Rs 45,492 crore which was 84 per cent of the budget estimate of 54,147 crore for the full financial year. The primary deficit too is running at a very high level of Rs 14,945 crore.

The government, it might be recalled, was aiming at primary surplus of Rs 8,045 crore. However, at this point of time, it appears unlikely that the government will end the current financial year with any primary surplus which is an indication of the annual performance of the Union.

The government's performance with regard to disinvestment of the shares of public sector companies has remained dismal. Till the end of November 1999, the realisation totalled Rs 1,383 crore as against the ambitious target of Rs 10,000 crore. With less that three months to go for the end offiscal, the government will be needing to expedite the process of disinvestment to raise the remaining amount.

With regard to committed expenditure like payment of interest on past loans, the government had till the end of November 1999, paid only Rs 49,514 crore. The government has to shell out more than Rs 38,000 crore towards interest payment in the current financial year.

Meanwhile, Federation of Indian Chambers of Commerce and Industry (Ficci) has urged the government to frame a long term fiscal policy for five years covering both direct and indirect taxes to impart requisite certainty and finality in tax policy matters.

Ficci has suggested that the shares allotted under the Employees Stock Option Scheme (ESOP) should only be subjected to long term capital gains when these are actually sold by the employees and not as perquisites at the time of exercising the option.

In its suggestion to widen the tax base, the chamber has also called for the introduction of agriculture income tax. Sinceagriculture income in India forms about 28 per cent of the GDP, Ficci has called for bold measures to tax agriculture income of rich farmers.

Ficci feels that there is a need for a long term policy with built-in provisions for calibrating every year like the Exim policy is followed in many countries. The rationale for this approach is to ensure to the investors both domestic and foreign, assesses both corporate and individuals a degree of certainty and finality in the tax related matters. Ficci feel that it will be in the interest of the tax administration to have a long term policy perspective for gearing up the machinery for higher revenue realisations.