BUDGET TRIVIA

RUN UP TO THE BUDGET 2004-05

The finance ministry has its own press to print the entire set of Budget papers. The press which runs in the basement of the building, becomes a sort of forbidden kingdom in the month before the Budget is presented.

The employees of the press, numbering about 30, actually stay in the ministry for the last seven days, without any means to communicate with the rest of the world.

This is the only way to ensure foolproof secrecy for the papers, which if leaked, would cost the finance minister his job. The practice started in the pre-Independence era.

The Economic Survey is, however, printed outside, in one of the government presses in the city. But the cover and some of the graph colour transparencies are printed by private presses.

The press is used for the annual budget ritual and the printing of the suplementary budgets. It has quite sophisiticated desktop printing machines, but the Budget speech still gets the old treatment as only a few are allowed to handle it and is usually the last one to be printed.

LEXICON

Fiscal Deficit: For the government, gross fiscal deficit is the same as fiscal deficit. It measures the difference between the total expenditure of the government and its receipts. Total government expenditure includes both revenue and capital account.

This also includes loans after netting out repayments. The receipts of the government include both revenue and capital receipts. But capital receipts also include the various types of borrowing by the government from within and outside the country.

The other receipts under this head are repayment of loans, disinvestment proceeds and so on. Subtracting the gross expenditure from the revenue receipts and capital receipts, net of borrowings, gives the fiscal deficit.

Subtracting gross interest payments from fiscal deficit yields gross primary deficit. This is the measure of the current deficit status of the government, minus its past liabilities.

BULL DOSE

From a near-term perspective, the expectations from the new government with respect to the mutual fund industry are as follows "" a continuation of tax-exemption on dividends; exemption of capital gains arising from equity mutual fund investment; to bring them at par with direct equity investments; reduce taxable income to the extent of the amount invested in equity funds, with a 3-year lock-in period.

This is similar to model followed in many countries as part of the deferred tax system; introduce guidelines for investment in overseas schemes that will help investors diversify their investments across countries; allow mutual funds to manage pension funds; in the US, 401(K) plans combined with variable annuities, have helped the US industry to overtake banks in terms of assets under management, and we see the same happening in India as and when the government makes the policy decision.

STATES MEN

Every year, the Union Finance Minister allocates Budgets on the basis of the recommendations made by the Planning Commission and it is based upon the population and poverty level of the states.

This year, we recommended the commission to allocate more money for the state generating higher revenues so that the funds can be utilised in building infrastructure, and more revenues can be paid to the Centre.

Out of the total revenue the central government generates in the form of taxes, 29.5 per cent are allocated to the states and here, Gujarat's share is miserably low, at 2.8 per cent, reduced from 4 per cent of the previous Budget, and we want it to be hiked substantially in this Budget to be tabled by P Chidambaram.