RBI's growth estimates are conservative: Jaswant

Finance Minister Jaswant Singh indicated yesterday that he expected the economy to do better in 2003-04 than the seven per cent growth rate of GDP targeted by the Reserve Bank of India.

Speaking at a press conference, while releasing his mini-Budget for 2004-05, the minister said, "The finance ministry feels the RBI projections tend to be conservative".

The latest data for the performance of the GDP for the second quarter of 2003-04 released by the Central Statistical Organisation, showed the growth rate of GDP was 8.4 per cent over last year.

He also said the Centre would meet its revenue and expenditure projections for the current financial year. The minister said despite the projected loss of revenue of Rs 10,000 crore due to the tax package announced on Thursday, the Centre would be able to stick to the Budget target of containing the fiscal deficit within 5.6 per cent of the GDP in 2003-04.

He said the ministry would exceed the revenue targets because, except excise, all other central taxes recorded good collections. He added that expenditure trends were encouraging and there were likely to be savings on several counts.

Singh said he did not foresee a flood of imports due to the easing of the customs rates.

Speaking about the package announced over the last two days, Singh said he was convinced that the process of decision making in the economy should not be inhibited, by the government holding back even those decisions, which did not need to wait for the Budget.

He said he was not aware if there would be an interim Budget or a regular Budget, but said the ministry was preparing for both.

He was also candid about the impact of political compulsion on the economic decision making saying in a Parliamentary democracy it was difficult to separate the two.

Commenting on the various measures announced yesterday and today, Singh said the ministry had worked on the package for the past 45 days.

Saying there would be "no sting in the tail", he ruled out measures later to make good the loss to the exchequer because of the mini-Budget.

He said the Centre's interest support plan at the Prime Lending Rate minus 200 basis points did not mean it was pitching for any particular rate of interest. Instead, it was only meant to direct cheaper credit on easy terms to some sectors.

The minister said the government was keeping a watchful eye over the movements in the capital markets. The Securities and Exchange Board of India (Sebi) had put in place a sound regulatory regime based on the recommendations made by the two Parliamentary committees on stock scam.

He said while currency management was an RBI function, the measures outlined now would help in the management of the foreign exchange reserves.

Jaswantspeak

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• The Centre will meet its revenue and expenditure projections for the current financial year
• The revenue targets will be exceeded because, except excise, all other central taxes have recorded good collections
• Expenditure trends are encouraging and there are likely to be savings on several counts
• The Centre's interest support plan at the Prime Lending Rate minus 200 basis points does not mean it is pitching for any particular rate of interest. It only means direct cheaper credit on easy terms to some sectors