The year, which was marred by crisis ranging from onions to the Unit Trust of India (UTI), is ending with the Kar Vivad Samadhan Scheme (KVSS).

However, the optimism is missing. The collections are likely to be of the order of Rs 1,500 crore. The amount, if shared with the states, will benefit the Centre only to the tune of Rs 335 crore. Although the two schemes are not strictly comparable, the purpose for which they have been formulated has remained the same. Both aimed at garnering additional revenue to bridge the fiscal deficit. To that extent, there isno cause for cheer for the North Block mandarins, struggling to save the first budget of the Bharatiya Janata Party (BJP)-led coalition government.

Although much has happened between VDIS and KVSS -- general elections, change of government, reshuffle of secretaries, two budgets approved by Parliament, nuclear explosions, fresh levies and roll back of proposals, soaring onion prices, Unit 64 muddle -- the basic problems facing the economy remained the same.

Former finance minister P Chidambaram was happy with the collections under VDIS. He had no intention of parting with the largesse initially, but later, under pressure from the states, decided to share the booty partly. Things were not very bright on the economic front, but the government did manage to paint a promising picture, thanks to the stalwarts who managed the show at the North Block.

Then there were general elections, political uncertainty behind the curtain manipulations and finally Yashwant Sinha emerged as the boss of the economic affairsof the country. Sinha assumed office of the finance minister for the second time.

To begin on a clean slate, one of the first decisions which Sinha took was to clear VDIS dues. In contrast to a hesitant Chidambaram, the new incumbent decided to give the share to the states as mandated by the statute within the fiscal 1997-98 itself. In addition to VDIS accruals, he gave additional Rs 1,000 crore to the states from the budget prepared by his predecessor.

In the process, the fiscal deficit for 1997-98 shot up to 6.1 per cent of the GDP against the budget estimate of 4.5 per cent. It suited Sinha then as also now to blame his predecessor for having allowed the fiscal deficit to go up to 6.1 per cent of GDP.

Sinha, in his regular budget, promised to bring down the fiscal deficit to 5.6 per cent of the GDP -- a promise which, according to his own admission, would not be kept. Sinha does not have a VDIS to help him balance the books. His KVSS is only giving him cold comfort. In view of the economicproblems, the revenue collection has remained subdued. The only way to save the budget is PSU disinvestment, but unfortunately the government so far has managed to raise only Rs 225 crore against the budgetary target of Rs 5,000 crore.

The problems, however, were beyond the numbers of fiscal deficit and budgetary announcements. Sinha in his interim budget noted with concern that "overall economic growth slowed down to 5 per cent in 1997-98, agriculture registered a negative growth of 2 per cent, industry continues to be in doldrums averaging 4.6 per cent over 12 months up to January 1998, and exports have recorded negative growth in dollar terms in each of the three most recent months up to January 1998." He added: "the bottlenecks in key infrastructure sector are well known, the capital market has been lackluster and the fiscal situation is significantly worse than expected".

The minister promised to "impart necessary stimulus to agriculture and industry, restore dynamism to exports, encourage largerflows of foreign investment in line with the National Agenda for Governance, take decisive initiatives to improve the state of infrastructure, strengthen the financial system, accelerate the reforms of the public sector while building a strong and transparent system for PSU disinvestment, and bring about strict fiscal discipline." It was March 25, 1998. If someone has to sum up the economic problems and suggest measures for resolving them on December 31, 1998, all that the finance minister said in March holds good even today.

However, before Sinha could finalise his regular budget, the government went ahead with a series of nuclear explosions at Pokharan. And as expected, sanctions of various nature were imposed by the US and other countries. The credit rating of the country too got a beating. However, the budget did not take note of these sanctions very seriously. It did propose Resurgent India Bonds (RIB) and the India Millennium Scheme to take care of falling forex inflows in the wake of sanctions. SBImanaged to raise $ 4 billion from the RIB. The government did not feel the need to exercise the option of raise funds under the Millennium scheme as the sanctions failed to have any discernible impact on nations economy.

Sinha's budget, however, will be remembered more for the faux pas on oil prices and roll backs on various counts which he had to announce under pressure from partymen and opposition. May it be petrol price, urea, special import duty, extension of the ambit of the service tax or any special request from other influential quarters, the magnanimous finance ministry failed to protect revenue. The loss will pinch the finance minister most when he will get up to present the 1999 budget on February 28 next.

Of onions & potatoes

Interestingly, one problem which Yashwant Sinha did not talk about initially was inflation. Bad weather and hoarding, coupled with mismanagement of crisis by the government, had the onion prices soaring. Other vegetables quickly followed suit. Onions not only hitthe headlines in our country but also found place in international media. The government, instead of taking action to arrest the crisis, chose to blame the wrong agriculture policies of the Congress and high fiscal deficit of the previous year. The argument that price rise was limited to primary goods and manufactured items showed no such trend, did not help. Onions brought tears to the BJP which lost elections in Delhi and Rajasthan. Not only that, the year of onion crisis also ensured return of the Congress government in Madhya Pradesh, otherwise not anticipated.