Fiscal pressure may force FM to revisit exemptions

Written by Mukesh Ranjan | New Delhi, Nov 13 | Updated: Nov 14 2007, 05:23am hrs
Faced with growing fiscal pressure to balance financing the inclusive growth as well as meeting the gross subsidy requirement, finance minister P Chidambram has indicated at the full planning commission meeting held recently that he would be left with no other option but to revisit plethora of tax exemption.

The other chief concern of the finance minister is that the UPA government has all along been not able to unlock the potential of public sector enterprises (PSEs) because of the Left pressure on the government.

Informing the members at the meeting, as it is learnt, the finance minister said, fingers are already being raised globally on the manner in which government is financing its expenditure, mostly off-budget route to meet the FRBM requirement.

Giving the details of the subsidy burden, the minister said, for this fiscal itself it is projected to the tune of Rs 54230 crore and if the backlog was taken into consideration the same would mount to Rs. 72800 crore.

Interestingly the plan document for 2007-12 has projected subsidy to the tune of Rs. 1,00,000 crore for the terminal year that is 2012. But the minister said, if the present trend continues, the government would need approximately Rs. 90,000 crore in 2008-09 itself to meet the subsidy requirement.

Making a strong case for unlocking the potential of the PSEs, as there is very little margin for the government to expand the tax basket, he said, if that was not possible, government needs either to be creative in downsizing the subsidy or to revisit various tax exemptions, which are almost equal to gross budgetary support.