Speaking at the economic editors' conference here on Wednesday, finance minister Yashwant Sinha said the fund will be similar to the present MoUs which the finance ministry has signed with nine states where fiscal help is extended by the Centre in lieu of their bringing about reforms by hiking user charges etc within a definite time frame.

On the controversy over GAIL pricing, Sinha joined issue with his predecessor P Chidambaram who had termed the decision to "sell shares cheap as scandalous". Sinha said six months ago, the Government tried to sell GAIL shares in the local market and got only Rs 66. As for selling GAIL's shares to its competitors like Enron and British Gas, Sinha said since the shares are openly traded, they could have bought them anytime anyway.

It was because on Enron and British Gas that the government got an offer of Rs 70--the previous best was Rs 65. Sinha referred to MTNL disinvestment during Chidambaram's tenure to prove his point that no one could predict what market price was the best. MTNL shares were quoting at a high of Rs 315 on June 17, 1997, but the Government did not disinvest at that price. By October the prices fell to Rs 275, and on December 2, Chidambaram's Government approved the sale at Rs 233 per share. Three weeks later, after the Government had sold cheap, prices rose to Rs 268.

This is precisely what happened in the case of GAIL, Sinha said.He also chose to defend his colleague PR Kumaramangalam's statement that the state-owned NTPC would be buying another state-owned company NHPC for Rs 4,500 crore, and that this money would be used to bridge the budget deficit. "This is not the same as cross-holdings," Sinha replied to a query as to whether this was not unfair, and similar to the method used last year when the government got oil companies to buy one another's shares.

On the economic situation, Sinha expressed confidence that the economy was on the revival path and a GDP growth rate of 6.5 to 7 per cent was likely to be achieved end the end of the current fiscal. Sinha said total expenditure would be within the budgeted limits and pressure was being mounted on field formations to meet the revenue targets.

The minister said that the fiscal situation "was difficult but not unprecedented." He added that fiscal problem was almost two decade old. He added that government's spending on food and fertilisers and defence would increase in the current fiscal. However, he stressed, the government would keep spending for the fiscal year 1999-2000 within budgeted limits. Sinha further added that the government was keen to enact the Fiscal Consolidation Act. He said the fiscal deficit in the first six months of the current financial year was 66 per cent of the budget estimates.

This was only two per cent more than the last year in the same period, he said. Stating that the economic revival was indeed taking place, Sinha said, "this can be established from any parameters like foreign exchange reserves, industrial growth rate, or food grain production.