The government has predicted a higher growth rate and lower inflation levelsin 2001-02. Chief economic adviser in the finance ministry, Mr Rakesh Mohantold the press at a post-Budget conference here on Wednesday that inflationlevels would be lower than the average of eight per cent in 2000-01. Theunderlying GDP growth rate for the next year has been pegged at 6.5 per centas against six per cent this year.In order to keep the fiscal parameters under control, the government wasforced to impose a Rs 17,000 crore cut in expenditure so that the fiscaldeficit target of 5.1 per cent of GDP could be met. "The balancing act wasnot easy to perform because there was a sharp increase in subsidy paymentsand tax collections were lower than projected," claimed expendituresecretary Mr CM Vasudev at the conference. The deficit was kept on coursedespite the fact that the outgo on food subsidy was higher by Rs 4,000crore, fertiliser subsidy by Rs 1,100 crore while collections from PSUdivestment were lower by Rs 7,500 crore. "All this signifies that the fiscalsituation is under control and the government is in a position to carryforward the process of fiscal consolidation," he added.
Nevertheless, some quick footwork would be required in the next one month tokeep the deficit under control. Mr Vasudev admitted that Rs 2,500 croreearmarked as proceeds out of disinvestment had not yet flowed into thecoffers. "We expect the sale of the three public sector refineries - CochinRefineries, Madras Refineries and Bongaigoan Refineries and PetrochemicalsLtd - to take place before 31st of March", said Mr Vasudev. North Block hadalso factored in the sale of Balco into the current year's fiscalcalculation. He was, however, more optimistic about reaching next year'sdisinvestment target through the big-ticket sale of Air India, IndianAirlines, Maruti Udyog and VSNL.
Mr Vasudev refused to comment on whether the RBI would lower interest ratesin the light of the reduction in rates on small savings by one to 1.5 percent. "It is for the RBI decide," he said. The interest cut would save thegovernment around Rs 2500 crore. However, he refused to comment on thepossibility of a cut in the provident fund rate from the current level of 11per cent as a consequence of the overall lowering of administered interestrates.
Revenue secretary S. Narayanan outlined the implicit assumptions behind somethe tax estimates. The average customs duty rate was 23 per cent at the timeof budget estimate last year and the figure has fallen to 18.8 per centafter a cut in the surcharge now. The 10-year average growth in excisecollection had been 11.36 per cent but in 2001-02, the figure is expected togo up to 15.62 per cent next year mainly on account of additional resourcemobilisation through higher excise duties on petrol and tobacco. The tax toGDP ratio in the current year is 9.08 per cent.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
