"The budget (1998-99) has taken credit for an amount of Rs 5,000 crore from disinvestment. Unless this amount is realised, there would be further pressure on borrowing and interest payments, leading to a possible crowding-out impact on the private sector," the Reserve Bank annual report states.

"Market will closely watch the evolving fiscal situation and in particular the progress in respect of the disinvestment programme and collection of revenue receipts. Any indication of slippage in this regard could trigger off unfavourable market expectations," it states.

The central bank has also called for appropriate signals to the markets about the government's commitment to fiscal deficit reduction as interest rates can influence investmentdecisions as well as capital flows.

Gross market borrowing for 1998-99 is higher by 33.1 per cent at Rs 79,376 crore from Rs 59,637 crore in 1997-98. During the current fiscal, net market borrowings budgeted at Rs 48,326 crore are higher by 13.2 per cent or Rs 5,842 crore. The ratio of revenue deficit to gross domestic product (GDP) at 52.8 per cent is up from the 50.6 per cent in the preceding fiscal.

According to the Reserve Bank's annual report, fiscal slippage in 1997-98 was mainly on account of a shortfall in disinvestment proceeds at Rs 906 crore against the budgeted Rs 4,800 crore, plus a Rs 10,927 crore shortfall in gross tax collections at Rs 1,42,720 crore inclusive of receipts under the Voluntary Disclosure of Income Scheme (VDIS).

The gross fiscal deficit in 1997-98 shot up to 6.1 per cent of the GDP and stood at Rs 86,345 crore in the revised estimates, up by nearly one-third against the budgeted 4.5 per cent. Revenue deficit for 1997-98 stood at Rs 43,686 crore in the revised estimates,exceeding the budgeted amount by nearly 45 per cent and constituting 3.1 per cent of the GDP.

Budget 1999 seeks to reduce fiscal deficit to 5.6 per cent of the GDP, down from the 6.1 per cent in 1997-98 through additional resource mobilisation and improved expenditure management. Revenue deficit to the GDP is seen lower at 3 per cent in 1998-99 from 3.1 per cent in 1997-98.

For 1998-99, resource mobilisation envisages a 17 per cent growth in revenue receipts and lower growth in aggregate expenditure. Tax receipts are seen at Rs 17,699 crore or 75.4 per cent of the gross revenue receipts. The budget estimates gross tax receipts at Rs 1,57,711 crore in 1998-99, 10.5 per cent lower than the 10.8 per cent in 1997-98. Additionally, resources through taxation amount to Rs 9,025 crore during the current fiscal with the states sharing Rs 1,780 crore with Rs 7.425 crore accruing to the centre.

The Reserve Bank annual report, however, observes: "In spite of the substantial tax efforts, the gross tax-GDP ratio isexpected to dip to 9.7 per cent from the 10.1 per cent in 1997-98."