Govt projects 8.1 pc growth in ’03-04

Notwith-standing the questions being raised by some foreign rating agencies and economists, the government has projected a high growth rate ...

Notwith-standing the questions being raised by some foreign rating agencies and economists, the government has projected a high growth rate projection of 8.1 per cent for the financial year 2003-04. This is more than double the growth rate of 4 pc which was recorded in the previous fiscal 2002-03.

In its third quarterly economy review, as mandated by the Fiscal Responsibility and Budget Management Act, the Finance Ministry has stated that there was significant improvement in the fiscal deficit at Rs 92,435 crore during April-December. According to the review, ‘‘fiscal deficit upto December 2003 was higher in absolute terms but lower as a percentage of budget estimate than during the corresponding period last year’’.

In fact, the government had introduced a pilot system of cash management in nine major spending ministries.

These ministries account for nearly 59 pc of the total budgeted expenditure. According to evaluation of the scheme, ‘‘the actual expenditure upto the third quarter did not exceed the projected requirements in respect of any of the nine ministries/departments selected for cash management’’.

However, the review did point out that inflation is on an upward trend. The quarterly average index of prices was 176.6 as against an average of 173.8 recorded in the first six months and 167.5 recorded in the corresponding quarter in the previous year.

The review, however, did not mirror the impact of 10.4 pc GDP growth posted during the third quarter, which government claimed would push up overall annual growth to beyond 8.1 pc. The review said higher growth would be achieved on the back of a robust agriculture growth as food grain production is slated to touch 212.2 million tonnes. The review said the 8.1 pc GDP growth for the period ‘‘bears testimony to the emerging fundamental strength and resilience of the economy’’.

On the external sector, it said exports grew by 13.5 pc while imports surged by 24.9 pc during the first nine months of 2003-04. It also highlighted the surge in forex reserves by $25 billion in a year to cross $100 billion by December 2003.

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An acceleration in the growth was also observed in mining and quarrying, electricity, gas and water supply, trade, hotels, transportation and communication, financing, insurance, real estate and business services, the review added.

On the direct tax front, corporate tax collection recorded an impressive growth of 30 pc during the quarter while income tax inclusive of personal income tax grew by 11 pc. As compared to this on the indirect tax front, growth in union excise duties collection was just 2 pc.

The review also stated that during the period under review, the government contracted fresh debt of Rs 3,37,491 crore. The money raised was utilised to fund the deficit of Rs 92,435 crore on Consolidated Fund of India, deficit of Rs 25,741 crore on Public Accounts of India and Rs 2,12,114 crore on repayment of past debts. Surplus cash is invested with RBI, the review added.