Fiscal Responsibility Bill cleared

Parliament on Tuesday approved the long-awaited Fiscal Responsibility and Budget Management FRBM Bill after Finance Minister Jaswant Singh...

Parliament on Tuesday approved the long-awaited Fiscal Responsibility and Budget Management FRBM Bill after Finance Minister Jaswant Singh promised that there would be no lowering of developmental expenditure.

Singh also announced that finance ministry will come out with a quarterly review of the economy before the end of the monsoon session of Parliament.

The Bill, which was passed by Lok Sabha in the Budget session, was approved by Rajya Sabha by voice vote. It will now go to President for his assent.

Winding up the two-day debate on the bill, Singh admitted the bill was a 8220;hesitant8221; step in containing fiscal deficit as Parliamentary standing committee had diluted some stringent provisions. The Minister added that the quarterly review of the economy to be tabled in Parliament shortly would encompass revenue generation and expenditure details indicating deficits. The Bill, which was first introduced in Parliament in 2001, was approved by LS after incorporating most of the recommendations of the standing committee on finance.

The FRBM stipulates that the revenue deficit would be brought down to zero level and fiscal deficit to two per cent in five years by 2008 to bring fiscal consolidation. Singh also said government will pre-pay Rs 7,500 crore worth of bilateral aid this fiscal besides swapping Rs 38,000 crore high-cost state government debts as part of the fiscal consolidation exercise.

Last year, government had pre-paid 3 billion worth of World Bank and Asian Development Bank loans without causing any ripple to the exchange rate of rupee, stock market and foreign exchange reserves.

The government, he said, had targeted buyback of over Rs 100,000 crore government securities held by banks to bring down NPAs. However, only Rs 15,000 crore worth of government securities were bought back in the first auction held earlier in the month. The Minister, however, said he was not 8220;discouraged8221; by the response as the buyback would lead to saving of Rs 750 crore in interest cost annually. Elaborating on difficult fiscal situation, he said the country8217;s debt is estimated to go up to Rs 17.79 lakh crore this fiscal from Rs 11.68 lakh crore in 2001-02. This increase, he said, was following the rise in internal debt which had gone up from Rs 800,000 crore to Rs 12.5 lakh crore.

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Terming the debt situation as 8220;serious but not alarming8221;, he said it was time 8220;we should not stretch ourself beyond the size of the mat.8221; Expressing optimism over the state of the economy, he said the economy had performed well despite worst drought in several decades and global economic slowdown.