Key deficit indicators up in Q1

Our Banking Bureau

Mumbai, Aug 28: AS all key deficit indicators increased substantially during the first quarter of the current fiscal over the corresponding period in the preceding fiscal, the Central government finances have come under severe stress.

Union finance minister Yashwant Sinha, an advocate of fiscal consolidation, might be crestfallen after seeing the deficit figures. Gross fiscal deficit was 68.3 per cent higher at Rs 42,198 crore and constituted 36.3 per cent of the budgetary estimates.

Gross fiscal deficit for 2001-2002 is placed lower at 4,7 per cent (5.1 per cent) of GDP and revenue deficit at 3.2 per cent (3.5 per cent). The primary deficit is estimated to decline to 0.2 per cent of GDP from 0.5 per cent in 2000-2001.

The fiscal consolidation envisaged in the Union budget focuses on expenditure management, mainly through non-productive expenditure, continued thrust on tax reforms and larger mobilisation of non-debt capital receipts. The budget has projected all the major deficit indicators, in terms of GDP, at levels lower than the revised estimates for 2000-2001.

Revenue deficit during the period nearly doubled to Rs 32,431 crore while primary deficit stood at Rs 24,683 crore. Revenue receipts were lower by 28.8 per cent at Rs 21,623 crore, as against 26.6 per cent growth during April-June 2000. Revenue realisation represented 9.3 per cent (14.9 per cent) of the estimates. Gross tax collections declined by 13.4 per cent as against 16.5 per cent growth. Shortfall in tax revenues was seen due to lower realisation from corporate taxes.

The proposed tax measures are based on principles of revenue buoyancy, further simplification and rationalisation of rate structure. Under the central value added tax (CENVAT) system, it is proposed to reduce the three rates of special excise duty to a single rate of 16 per cent. CENVAT has been put into practice and contributes about 68 per cent of the total excise revenue.

The Union budget proposals on some tax reliefs are expected to cause a revenue loss of Rs 5,500 crore, which is to be made up with tax buoyancy and increased voluntary compliance.

The budget estimates placed gross tax revenue at Rs 2,26,649 crore, higher by Rs 28,328 crore from the last fiscal’s Rs 1,98,321 crore.

The rise in tax revenue is expected from higher collections of corporation tax (rs 5,479 crore), income tax (RS 5,329 crore), custom duties (Rs 5,041 crore) and Union excise duties (Rs 11,039 crore).