NEW DELHI, March 19: With the Union budget for 1998-99 financial year delayed, the BJP led coalition government will take a vote-on-account next week to meet essential government expenditure for a four-month period.Immediately after the swearing in, the new Prime Minister Atal Bihari Vajpayee told newsmen at Rashtrapati Bhavan today that he would prefer a vote-on-account over an interim budget.The vote-on-account would essentially enable the Central government to draw funds from the exchequer to meet the expenditure of the various government departments in the absence of a regular budget, Finance Ministry sources here said. The BJP government is likely to present a full-fledged budget for the 1998-99 fiscal sometime in June, informed sources added.
In the first Cabinet meeting, there were indications that the vote on account was expected to be taken up on March 26 in Parliament. It is not clear as yet in what form the vote-on-account would be presented. But there would definitely be a statement onexpenditure and revenue for the 1997-98 fiscal which ends on March 31.
The new government would have to take several factors into account while preparing its budget for the new fiscal. Though the outgoing Finance Minister P Chidambaram has said he was leaving the economy in a fine fettle with an estimated GDP growth of over five per cent, the new government faces a major problem in falling revenue collections.
According to an estimate, there will be a revenue shortfall of Rs 10,000 crores with a major slide in customs duties collections. This is mainly due to falling international prices of oil coupled with a low volume of import and a pickup in domestic crude production. The fall has been as steep as 40 per cent or Rs 8,000 crore.
Also the new government has to provide for transfer of 77.5 per cent of the VDIS collections to the states and of about Rs 6,000 crore being realised till March end while about Rs 4,000 crore have to be transferred to the states. The excise collections are also expected toslip by about Rs 1,500 crore. Some of the reasons being attributed to the shortfall in revenue are the low tariff regime combined with a general decline in imports and the general slowdown in industrial activity because of political uncertainty.
Some economists have also traced the loss in buoyancy in revenue collections to the low direct tax regime. Fiscal experts believe that the new BJP government has no option but to raise customs tariffs to make up the loss.
The industry has also been demanding a rise in customs tariffs as the current regime, it says, is below the WTO prescribed levels which has made Indian exports uncompetitive in international markets.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
