FM may wield the stick again, without warning this time

New Delhi, February 1: | Updated: Feb 2 2002, 05:30am hrs
Though finance minister Yashwant Sinha has not given any warning this time of a tough budget as he had been doing for the past two years, taxation is what he may again resort to, to raise resources.

Additional resource mobilisation through tax measures to bridge the widening gap between revenue and expenditure is likely to be the core of the Budget for 2002-03.

According to finance ministry sources, sluggish tax collection in the last quarter of 2000-01 and in the current financial year was putting tremendous pressure on the government to look for additional resource mobilisation measures on the one hand and fix a cautious and realistic growth target for tax mop-up on the other, in the Budget for 2002-03.

In view of the poor revenue realisation trends, sources said, the government would have to go in for tough measures to shore up revenues through taxes in the next fiscal.

They added that in the current situation with economy witnessing a slowdown, the scope for raising additional resources from indirect taxes, with the exception of service tax, was limited. Therefore, the focus area for generating additional revenue would be direct taxes.

Sources said that though a final list of the additional resource mobilisation measures would be firmed up only towards the final stages of budget-making process, the finance ministry was all set to rationalise exemptions and tighten tax administration with a view to checking evasion.

Political expediency also suggests that 2002-03 is the appropriate year for the BJP-led NDA government to go in for tough measures as the assembly election in key states like Uttar Pradesh and Punjab will be over by the time of the presentation of Budget, and Lok Sabha elections will be two years away.

Simultaneously, with targets in two consecutive financial years set to go awry, both Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC) are taking extra care in formulating realistic tax mop-up growth targets for 2002-03, said sources.

It may be noted that revenue receipt in 2000-01 at Rs 1,90,988 crore was only 92.6 per cent of the revised estimate of Rs 2,06,166 crore. Net tax revenue in the previous fiscal had fallen short by over Rs 9,000 crore from the revised estimate at Rs 1,35,193 crore. Non-tax revenue in 2000-01 stood at Rs 55,795 crore against the revised estimate of Rs 61,763 crore. Total expenditure in the previous fiscal was Rs 3,19,610 crore against the revised estimate of Rs 3,35,523 crore.

In the current financial year, the total revenue collection up to December has been only Rs 132,690 crore, which worked out to be 57.3 per cent of the targeted figure of Rs 231,745 crore for the entire fiscal.

Coupled with slippages in revenue collections, the total expenditure increased by over 14 per cent to Rs 233,718 crore during April-December this fiscal compared to Rs 204,821 crore in the corresponding period of the previous fiscal.