In a statement here, Assocham president KP Singh said: "There is no option but to evolve a time-bound mechanism for eliminating hidden and non-merit subsidies, leading to the creation of a subsidy free regime based on the principle of `user pays'."

The rising fiscal deficit despite a cut in capital spending has made it imperative for the NDA government to take action. The Assocham president pointed out that the fiscal deficit levels in the first five months of the current fiscal has shot up to 60.2 per cent of the estimates made for 1999-2000 budget. As against this, the comparable level in the previous two years was less than 52 per cent.

Singh further pointed out that there was 29 per cent decline in capital spending of the central government in the first five months. The capital expenditure of the central government during April-August 1999 has gone down to Rs 17,731 crore as against Rs 25,091 crore spent in the corresponding period last year.

Singh warned that the slow down in capital spending could hurt the recovery trends in the economy.

The chamber president said the numbers for the first five months of the current year show that tax revenues of the central government continue to show a negative growth rate even though the budget has projected a 21 per cent increase in tax receipts during the year.

The share of central tax revenue collected to the total budget estimates during the April-August period also shows that the collections are the worst in the last three years. On the expenditure side, the revenue expenditure during April-August has gone up by more than double the projections made in the budget. Revenue spending went up by around 18 per cent during April-August as against 8.6 per cent increase projected in 1999-2000 budget.