Small savings receipts to rise further

Small savings receipts are expected to continue their buoyant streak during the next fiscal too with the finance ministry budgeting an over 10 per cent increase in their mop-up to Rs 78, 200 crore during 2004-05 compared with Rs 70,900 crore in the revised estimates of 2003-04.

While the ministry has not budgeted for any extraordinary receipt under loan recoveries from states in the interim Budget for 2004-05, finance ministry officials said it would be included in the regular Budget to be presented after the new government was in place.

According to the debt swap plan originally conceived by the ministry, states were supposed to earmark a larger portion of their net small savings receipts towards pre-paying their high-cost Central loans in the next fiscal.

In 2003-04, they had forked out 20 per cent of their receipts towards pre-paying their high-cost loans. Next fiscal, they may be asked to set aside 30 per cent of their receipts.

Earmarking 30 per cent of the small savings in 2004-05 would mean that states would shell out Rs 23,460 crore for prematurely retiring their high cost debt.

The Centre would allow also them additional market borrowings for the swap plan. "The exact quantum of extra market borrowings has not yet been decided," an official said.

In the current fiscal, the Centre has reaped a Rs 46,602 crore bonanza in capital receipts through the states' debt swap. This is reflected in the sharp 258 per cent increase in recoveries of loans to Rs 64,625 crore in the revised estimates for the current fiscal against the budgeted Rs 18,023 crore.

The unabated rise in small savings collections during the year had encouraged the Centre to scale up its realisation to Rs 70,900 crore, 16 per cent more than what it had budgeted for the year.

States have pre-paid about Rs 36,600 crore of high-cost Central loans till now. In the remaining two months, they are expected to prepay another Rs 10,000 crore.

The Centre, on its part, has repaid its liabilities to the National Small Savings Fund through these recoveries, which figure as capital spend in the revised estimates for non-Plan expenditure for the current fiscal.

And the NSSF, in turn, has invested the surplus cash of Rs 60,400 crore (Rs 46,602 crore this year and Rs 13,800 crore last fiscal) in government securities.

Finance ministry officials said this was one of the reasons for the lower market borrowings in the current fiscal. The budgeted market borrowings of Rs 1,07,194 crore have been revised downwards by 22 per cent to Rs 82,982 crore.