Another Rs 2,240 crore given away

Measures will stay off government's books: Jaswant

The pre-poll tab for the centre climbed to Rs 12,240 crore with the latest giveaways announced by Finance Minister Jaswant Singh yesterday.

However, announcing the measures, Singh said he was confident of meeting the targets set out by the Fiscal Responsibility and Budget Management Act. "You will be gladly surprised (on the fiscal deficit), and I will adhere to the provisions of the Act," the minister told a press conference today.

He acknowledged that the revenue loss through the indirect tax cuts announced on Thursday would be about Rs 10,000 crore. But he said the new measures would have no impact on the fisc because the burden would be borne "by existing agencies outside the government".

He said Parliament had the right to be informed of the fiscal position first, which would be done as part of the interim or regular Budget.

Government officials reckoned that the Centre's interest subsidy bill for the Rs 110,000 crore Infrastructure and Manufacturing Fund, Small and Medium Industry Fund and the Agricultural Infrastructure and Credit Fund, would be about Rs 2,200 crore. In addition, based on the current student loan offtake of around Rs 2,000 crore, the Centre's subsidy burden will be Rs 40 crore.

In 2004-05, the new government will, therefore, have to provide for an additional means of resource generation to offset the loss. Singh exuded confidence, saying what the government would lose in arithmetic terms would be made up through a higher growth rate of the economy.

On the flip side, the Centre will save Rs 2,000 crore a year on food subsidy. The finance minister said the decision to allow the Food Corporation of India to raise funds from the market would lead to a reduction of revenue expenditure of the Centre. In 2003-04 the Budget target for food subsidy is Rs 27,800 crore.