New Delhi, Feb 27 : Finance minister Yashwant Sinha will present his fourth annual Budget to Parliament on Wednesday, claiming a good record on the fiscal front. Mr Sinha is expected to show that he has stayed within his budgeted fiscal deficit target of 5.1 per cent of GDP. Middle class households may be relieved by the fact that Mr Sinha will not be proposing any hike in direct tax rates.The finance minister will present the Budget to Parliament at 11.00 am. His first post-Budget interview will be aired on Doordarshan at 2.45 pm, straight from Parliament House.
According to indications, the fiscal deficit during the current fiscal would more or less remain at the manageable level, thanks to the efforts to cut expenditure and due to the buoyancy witnessed in direct taxes.
However, the task of fiscal correction is far from over and Mr Sinha would continue the exercise in the Budget, broadly on the lines suggested by the Fiscal Responsibility and Budget management bill. Although the Fiscal Bill is yet to become an Act, Mr Sinha will take note of its recommendations.
The Gujarat earthquake too is expected to cast its shadow on the Budget. The minister, in a bid to raise funds for earthquake victims, had already imposed 2 per cent surcharge on income and corporate taxes in February, and in all probability, may continue the cess.
The losses on account of earthquake has been estimated at more than Rs 20,000 crore by the Gujarat government. As far as indirect taxes are concerned, the finance ministry will focus on restructuring the excise and customs duties and make efforts at widening the service tax net.
Apart from raising additional amount for financing rehabilitation work in Gujarat, the finance minister will initiate steps for arresting the slowdown in revenue realisation and honouring the commitments laid down in the Fiscal Responsibility and Budget Management Act.
Mr Sinha will also have to initiate measures for reversing the economic slowdown and come out with credible incentives to give a boost to the manufacturing sector. The economic growth, as per the CSO advance estimates, will decelerate to 6 per cent from 6.4 per cent recorded in the previous financial year.
On the indirect tax front, one of the important considerations that will engage Mr Sinha's attention is the removal of quantitive restrictions from April 1. The finance ministry would have to device a tax structure that protects the interest of domestic industry against a possible deluge of imports. This can be done by lowering excise duty and increasing customs, though both are difficult options.Excise collection during the current fiscal has not picked up as expected and, therefore, it would be difficult for the minister to lower the rates further unless he decides to gamble on growth.
The finance ministry, it may be mentioned, has been working on a proposal to modify the Cenvat structure. The Parthasarathi Shome committee had pleaded for a two-tier excise structure.
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
