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Rediff.com  » Business » Discussion on Interim Budget on Feb 4

Discussion on Interim Budget on Feb 4

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January 30, 2004 19:10 IST

The discussion on the Interim Budget for 2004-05 in the Lok Sabha and the Rajya Sabha will be taken up on February 4.

Finance Minister Jaswant Singh will reply to the debate in the Lok Sabha on the same day.

The finance minister will present a vote-on-account on February 3.

His reply in the Rajya Sabha will be on February 5, the last day of the 13th Lok Sabha, Parliamentary Affairs Minister Sushma Swaraj told reporters in New Delhi on Friday after a meeting of the business advisory committee of the Rajya Sabha.

The Rajya Sabha will resume discussion on unemployment on February 5, while the Lok Sabha will have private members' business on that day.

The finance minister is likely to forecast strong economic growth when he seeks Parliament's approval for the interim spending.

2004-05 projections

  • Expenditure in 2004-05 to grow 10-12% over this fiscal.
  • Realistic growth in tax mop-up, 12-15% growth expected.
  • Buoyant economy to result in higher excise and corporate tax collections.
  • Fiscal deficit for 2003-04 to be 15-20 basis points lower than the 5.6% of GDP.
  • Defence spend my be close to Rs 50,000 crore.

The finance minister is likely to project a fiscal deficit target of around 5 per cent of the gross domestic product for 2004-05 in his interim Budget.

The revised estimate of the fiscal deficit for the current fiscal is likely to be 15-20 basis points lower than the Budget estimate of 5.6 per cent of GDP.

Finance ministry sources reckon that expenditure during an election year will be high. Total expenditure for the next fiscal is likely to vary between 10 per cent and 12 per cent over the revised estimate for the current fiscal.

This year's Budget estimate had projected an 8.6 per cent increase in total expenditure over the previous year's revised estimate.

In the current fiscal, expenditure has been kept in check and the government is likely to post a saving of about Rs 5,000 crore (Rs 50 billion).

Finance ministry officials said the saving would be similar to that made in the last fiscal and in the predictable areas of defence and Plan expenditure and because of the zero offtake from the infrastructure viability gap fund of Rs 2,000 crore (Rs 20 billion).

Last year the government saved over Rs 6,250 crore (Rs 62.5 billion), much of which was due to lower defence spending.

Singh is, however, deriving comfort from the fact that the economy has gathered momentum and a 7.5-8 per cent growth target for 2004-05 is well within reach.

Increased economic activity is likely to translate into higher tax receipts next fiscal. He will be realistic in estimating a 12-15 per cent growth in tax receipts for 2004-05.

In the current fiscal, the shortfall in indirect taxes is likely to be more than made up by direct tax receipts, expected to be Rs 6,000 crore higher than the Budget estimate.

According to the sources, defence spending is likely to be higher in 2004-05 because of the Gorshkov and advanced jet trainer deals signed in the current fiscal.

In fact, the vote-on-account for the first four months of 2004-05 will reveal the swollen defence budget. Defence payments are staggered, so although they may climb next year, a saving is expected in the current fiscal.

While food and oil subsidies will be the pressure points in the next fiscal's expenditure budget, the growth of interest payments will slow. The average cost of the government's market borrowings has come down significantly this year.

In the current fiscal, the Centre borrowed at rates as low as 5 per cent to fund its fiscal deficit.

With inputs from Business Standard

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