Finance Secretary Arun Ramanathan said the government was closely watching the trickle-down effect of the first two stimulus packages and will respond to the evolving situation. “Our challenge is to implement the first two packages effectively,” Ramanathan said adding that it was constitutional propriety that did not allow fiscal announcements to be made in the Interim Budget.
The government will be borrowing an additional Rs 45,000 crore in the current fiscal. Will this come from market borrowing?
No. We are in consultation with the Reserve Bank of India to bridge the gap. We will raise the funds, but have not yet decided how. There is a problem of how much the market can contribute. One option is to use funds under market stabilisation scheme.
What is the basis of assumption of a sharp dip in the subsidy burden next fiscal?
We are expecting the subsidy to come down considerably during the next year (from Rs 1,22,352 crore in the current fiscal to Rs 95,578 crore in the next fiscal). This year we have disbursed almost Rs 75,000 crore as fertiliser subsidy. We have also issued Rs 20,000 crore worth of bonds.
According to fertiliser ministry estimates, prices are falling and we will have to spend less than Rs 50,000 crore on account of the fertiliser subsidy in the coming year. Similarly, payment to oil companies on account of under-recoveries from the market will also be non-existent in the coming year with oil prices easing. The oil ministry expects the international crude oil price to be below $70 a barrel for the next year.
How serious are you about disinvestment as a fund-raising option?
We have identified about a dozen companies for that purpose. Four or five may be ready by May-June. The next government will decide on the timing of the IPO in consultation with the parent ministries. In the case of Cochin Shipyard, the disinvestment plans are moving ahead.
Will the 4 percentage point excise duty cut be extended beyond March? Why are revenue projections for the next fiscal lower than the budget estimate for the current fiscal?
The government will take a view by March 31. Nobody anticipated the global slowdown when estimates were made for 2008-09. The numbers have been revised downward for the current fiscal taking into account the impact of the global economic slowdown.
Concessions were also given on indirect taxes to fight inflation and then to boost demand. We have tried to be conservative for the next fiscal to avoid reductions in target later on.