BJP gives Rs 3,215-cr more to states

By contrast, former finance minister P Chidambaram’s fiscal deficit target for 1997-98 was 4.5 per cent. This was, in turn, lower than the previous year’s 5.2 per cent, and 5.4 per cent the year before. Clearly the days of unreasonable fiscal compression are over.

While presenting the interim budget, Sinha promised to try to bring down the fiscal deficit to an acceptable level when presenting the full budget.

Given the sharp shortfalls in tax revenue in the current year — collections fell short by a whopping 12.6 per cent — it seems unlikely that Sinha will be able to reduce tax levels any further. And though the BJP has indicated that it would like to raise certain taxes, especially customs duties, a lot will depend on the expected import growth during 1998-99. With few expecting a significantly higher growth in the economy, Sinha may not eventually be able to raise import duties in any significant manner either. The sharp shortfallsin tax collections, in fact, have also forced the government to temper their expectations for the coming year. As against the 21 per cent increase in the target for 1997-98, the interim budget is targeting a more modest increase of 9 per cent. As expected, with the year’s economic growth falling far below expectations, most projections made in Chidambaram’s "dream budget" have gone completely haywire.

Net tax revenues for the Central government fell by a whopping 12.6 per cent, making this perhaps one of the largest shortfalls seen in recent years. Apart from the sharp fall in revenues, the United Front government managed to achieve precious little as far as disinvestment of PSU shares is concerned. Against the target of Rs 4,800 crore, they got a mere Rs 906 crore. Promising to make the process of disinvestment more transparent and take it forward quickly, Sinha’s interim budget hopes to net Rs 5,000 crore during the coming year.