NEW DELHI, MAY 8: Finance Minister Yashwant Sinha said on Monday that the federal budget did not provide much room to accommodate demands from both his coalition allies and opposition parties to restore subsidies which he had cut."The general demand has been that I should cut down on taxes and restore subsidies," Sinha told the upper house of parliament. Sinha was replying to a discussion in the upper house on abill to approve government expenditure."But budget is prepared on realities. I don't have that kind of magic wand to do all this," Sinha said. "In the budget, there is rigidity and there is not much flexibility. The room to manoeuvre is not high after meeting subsidies, interest payments and defence and establishment expenses," he said.Opposition parties and some allies of the ruling coalition have been pressuring the government to reverse its decision to cut fertiliser and food subsidies announced in the 2000/01 (April-March) budget in February.The cuts were announced as part of measures to rein in India's burgeoning fiscal deficit, which the government hopes to pare to 5.1 percent of gross domestic product in 2000/01 from 5.6 percent in 1999 and fertiliser subsidies account for the equivalent of 14 per cent of GDP. "The fiscal deficit is a matter of concern," Sinha toldlawmakers.Sinha said pension and establishment expenses of the central (federal) government and state governments which were 374.01 billion Rupees in 1996/97 rose to 736.46 billion in 1999/2000, largely because of pay revisions recommended by a government-appointed panel.He said he was expecting a recently set-up government commission to make suggestions to reduce spending. "The entire functions of all government departments need to be reviewed, they need to tell us that certain functions or parts of departments are no more necessary. I expect such recommendations to reduce expenditure."Referring to a 10-week border clash with Pakistan-backed intruders last year, Sinha said the government would not compromise on defence spending. "On the question of self-defence, this government will not make any compromises. For the country's security, we are committed to make the expenditure needed."
