Sinha to meet experts to curb mounting fiscal deficit today

Though the state of the economy is good in majority of the parts, the fiscal front is the only area of concern,’ Sinha said, adding Government is left with no soft option but to resort to belt-tightening measures to ensure fiscal deficit is kept at the targeted four per cent of the GDP.

The fiscal deficit is expected to be around 6.1 per cent of the GDP this financial year. This is no doubt less than 6.9 per cent of GDP in 1998-99 but way off the targeted level of four per cent in the budget this year.

While presenting the general budget in February, Finance minister planned to restrict the fiscal deficit to Rs 79,955 crore at the end of 1999-2000. However, due to various reasons including Kargil conflict, Government has run a fiscal deficit of Rs 48,126 crore at the end of August ’99. The revenue deficit in the same period stood at Rs 33,412 crore.

Sinha had earlier said that the burgeoning fiscal deficit could be controlled only by tax mobilisation efforts and expenditure control.

Revenue collections in the first half has been buoyant recording an overall growth of 13.4 per cent in both direct and indirect tax collections.

As Sinha himself has virtually ruled out any major changes on revenue front to enhance tax realisations in remaining months of current financial year, it is only through expenditure control, Government could effect fiscal consolidation.

Total tax collection during April to September this year witnessed an increase to Rs 68,986.81 crore as against Rs 60,869.17 crore during the same period last year.

Soon after assuming office as Finance Minister today, Sinha told mediapersons that he does not propose to levy fresh taxes this year including Kargil tax to meet expenditure of military operations.

Recently Government slapped a 40 per cent hike in diesel prices to mobilise over Rs 6,000 crore to offset the widening oil pool deficit arising out of steep hike in international prices.

Being a coalition government it might not be immediately possible to take unpopular step of hiking the highly subsidised prices of LPG and kerosene whose international prices too have gone up with LPG prices going up by whopping 140 per cent.