Deficit target may be hard to meet

MINI BUDGET 2004

Finance minister Jaswant Singh has traded a dip of atleast Rs 2,500 crore in indirect tax revenue in this fiscal for imparting a buoyancy to the business and industrial sector.

Revenue officials said they estimate a revenue loss of atleast Rs 10,000 crore on account of the duty cuts in next fiscal. This will make it difficult for Singh to match his promise to rein in the fiscal deficit to 5.6 per cent of the Gross Domestic Product in 2003-04.

Government officials said Singh has a leeway in the additional mop up expected from the sale of the government's 10 per cent stake in ONGC and Gail. The disinvestment receipts could well exceed the projected Rs 13,200 crore targeted in the Budget.

As per the cumulative monthly figures of government accounts from April to November, the fiscal deficit of the Centre has touched 61 per cent of the budget estimate at Rs 93,656 crore.

But at the same time non pln expenditure has shot up to over 67 per cent of the budget target, at Rs 2,13,474 crore. In the same period of last fiscal the comparable percentage was only 56.2 per cent at Rs 1,66,869 crore. At the same time plan exenditure has gone upto Rs 66, 577 crore whih is 55 per cent of the budget target.

Singh has undertaken a major risk in slashing customs duty rates in a year when the collectiosn has just been averaging over eight per cent compared tot the budget target of 14 per cent. He has also given away sops in excise duties when the collection there is even worse at just eight per cent.

The minister has therefore made it certain that the indirect tax department will have to revise downward the projection of tax collections from the budget estimate of Rs 49,350 crore for customs and Rs 96,791 crore for excise.

They said as a result of today's announcements including a five per cent across the board cut in basic customs duty, will reduce the collections under this head by about Rs 4500 crore.

In addition the abolition of the four per cent Special Additional Duty will set the finance ministry back by about Rs 3,700 crore. Budget 2003-04 had estimated SAD to yield Rs 3,757 crore.

The officials also said the slashing of the excise duties on Inland Air Travel Tax and Foreign Travel Tax will cost Rs 1,115 crore to the government as per the budget estimate for 2003-04.

Taxing matters

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Revenue officials said they estimate a revenue loss of atleast Rs 10,000 crore on account of the duty cuts in next fiscal

This will make it difficult for Singh to match his promise to rein in the fiscal deficit to 5.6 per cent in 2003-04

From April to November, the fiscal deficit of the Centre has touched 61 per cent of the budget estimate at Rs 93,656 crore