Positive signals in a subdued manner

COMMENT: E A S Sarma, Principal, Administrative Staff College Of India

One tangible provision of this year's Budget is the additional Plan allocation of Rs 10,000 crore for priority sectors.

Reorientation of Rural Infrastructure Development Fund, increased outlay for Accelerated Irrigation Development Programme, enhanced credit for agriculture, involvement of panchayats in rural water supply and the scheme for rural housing are positive features. Reforming PSUs and using disinvestment proceeds for building social sector infrastructure is also a welcome step.

The budget sends positive signals to small as well as big industry "" in a subdued manner. Instead of tax incentives, Finance Minister Chidambaram could have emphasised procedural simplification.

While there is respite from tax on long-term capital gains on shares, short-term tax, coupled with tax on share transactions, will prove an irritant.

On the fiscal side, projections of revenue and expenditure are unrealistic. Tax revenue is expected to register a growth of 17.6 per cent in 2004-05 over the Revised Estimate (RE) for 2003-04, whereas the growth during the previous year was only 13.5 per cent.

Similarly, the growth of non-Plan expenditure for 2004-05 over the RE for the previous year has been projected at -5.81 per cent, when the corresponding growth for the previous period was as high as 16.53 per cent. The fiscal deficit is likely to be higher than projected. The receipts include Rs 4000 crore from disinvestment.

If it is to be shown separately, in line with prudent fiscal accounting, the deficit could be higher by another 0.15 per cent. Lack of transparency in the Fiscal Responsibility Budget Management (FRBM) regime is something one would have liked to avoid.