Since by now estimates of the expenditure on the Kargil war have been worked out, the finance ministry should know what it is talking about. But you never can tell. The same news report also says that according to senior finance ministry officials no tax proposals are under consideration "at present". With the general election under way, a caretaker government could hardly be expected to have firmed up tax proposals.

It will also be unrealistic to expect a new government to work out a tax package immediately after it takes office in October. The trouble is that there are no indications of an improvement in the fiscal scenario from the mandarins holding out a no new tax initiative assurance. May be they are whistling in the dark,troubled by the large April-July fiscal deficit. Sure enough the fiscal gap could narrow by September. But it does not follow that the centre's fiscal deficit in 1999-00 will come down to the budgeted 5.2 per cent (including small savings) from last year's 7 per cent estimated by CSO. Sinha worked out this year's fiscal deficit target on the assumption that last year it was 6.5 per cent of GDP. Thus, other conditions remaining the same, the fiscal deficit for 1999-00 should work out to at least 5.7 per cent of the GDP. But other conditions are far from remaining the same.

Post-Kargil, the promise to curb the growth of defence (revenue) expenditure to 7.9 per cent from 18.5 per cent in 1998-99 has become unrealistic. There is no chance of economising on defence capital expenditure, budgeted to grow by 20 per cent. Fertiliser subsidies may actually rise. Sales of subsidised foodgrain will have to be stepped up in order to bring down the excess buffer stock. These expenditure increases could absorb the bulkof the Rs 9,334 crore additional estimated revenue from tax changes in the latest budget. Note that the central government has recently sanctioned an increase in dearness allowance payments to its employees. Thus, keeping vacant posts in government unfilled (about which official publicists go to town) does not quite underscore the will to create expenditure economies required to keep the fiscal deficit below last year's high.The new government will be in no hurry to take hard decisions on the Kargil tax or subsidy reductions what with its manoeuvrability curtailed by the need to increase oil product (including diesel) prices. May be this is what North Block mandarins mean by cynically holding out the assurance of no new taxation this year.