The Institute further felt that the government would not be able to curb the fiscal deficit to a level of 5.1 per cent as targeted.

Reacting to the Union Budget, ICAI president G Sitharaman said his doubts regarding fiscal deficit notwithstanding, he was confident that the government would not let the inflation levels rise beyond a limit.

However, several factors such as a bad monsoon and other unforeseen events such as Kargil may make the targets go wrong, he cautioned.

Sitharaman felt that the finance minister was pursuing a "hidden agenda", details of which he did not elaborate in this Budget. He felt that the finance minister was building up a case to announce big-bang policy initiatives in the next Budget. He felt the government would take small steps towards recapitalisation of weak banks, disinvestment of public sector undertakings, administrative overhaul and control of government expenditure during the year.

Follow up of all these steps would come up in the next Budget, he said.The 2000-01 Budget will give tax payers a lot of "peace of mind" though the tax payments may have gone up marginally.

On the issue of doubling tax rates on dividends paid by companies, Sitharaman said, the government should have restricted the increase to a small percentage. He said, the tax could have been raised by 12.5-15 per cent instead of being doubled.

The ICAI president also felt that the minister has ironed out most of the anomalies and inconsistencies of the last Budget in this Budget, though he has withdrawn several exemptions that were available to the tax payers.Similarly, the withdrawal of 80 HHC would now be affect the competitiveness of the country's exports and thereby foreign exchange reserves. He said considering that the country's import bill was expanding due to rising prices of oil products, the government should have delayed the partial withdrawal of the benefit under section 80HHC.

The ICAI president also stated that the government should have withdrawn section 145(A) of the Income Tax act which requires the companies to add excise tax payable on goods shown as closing stock. Such requirement inflates the value of the closing stock and therefore the taxable income of the company, he said. Sitharaman felt that since the guidelines issued by the institute required companies to include the excise payable in valuation of closing stock, this provision in the I-T Act could have been done away with.

ICAI fears that companies may not want to follow the accounting standards AS2 on inventory valuation and instead may opt for audit qualification.