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FM puts fiscal deficit at Rs 1 trillion; hikes budget support to plan by Rs 111 bn to Rs 881 bn

BUDGET 2000

Finance Minister Yashwant Sinha has said a weakening fiscal situation needs to be confronted. "A long history of high fiscal deficits has left us with a legacy of a huge public debt and an ever-growing bill of interest payments. This year we have incurred unanticipated expenditure on national defence, elections and the super cyclone in Orissa. The residual impact of the Fifth Pay Commission and the need for special fiscal assistance to the States have added to our burden," he said, presenting the Finance Bill in the Lok Sabha today.

"All this, combined with shortfalls in receipts from disinvestment and revenue, has raised our net borrowing requirements (our fiscal deficit) to over Rs 1 trillion (10 lakhs = 1 million; 1,000 million = 1 billion; 1,000 billion = 1 trillion). This will add about Rs 100 billion to our interest bill next year. We must also find additional resources for Plan, Defence and for additional transfers to States under the interim award of the Eleventh Finance Commission.

"If we do not raise the resources and instead take recourse to even higher borrowing next year, then we will jeopardise our prospects for growth, reignite the flames of inflation, sow the seeds of another Balance of Payments crisis and place an unfair burden on the next generation," he said.

"We must put our fiscal house in order. This means hard decisions and sacrifices. At the same time we must preserve the intrinsic dynamism of our economy, which alone can deliver sustained growth with social justice. For this reason, despite the severe fiscal strain, the budget support to the Plan is being increased by Rs.111 billion to a level of Rs 881 billion compared to Rs 770 billion in 1999-2000."

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