Vajpayee to meet CMs today to zero in on fiscal health

Finance Minister Jaswant Singh, Planning Commission deputy chairman K.C. Pant and senior finance ministry officials will also attend the meeting. The national consultative meeting has been called by the Prime Minister to take a final decision on the steps to cut non-Plan expenditure through a freeze in dearness allowance, suspension of bonus and commutation of pension, and reduction in the retirement age of government employees from 60to 58 years.

The demand for more funds by some States will also be taken up at the meeting, the sources added. Finalisation of the debt swap mechanism for the states and the steps required for implementation of value added tax regime by states from April 1, 2002, are also on the agenda.

A debt swap scheme via small savings loans and additional open market borrowings would be discussed at the Friday meeting. Using 20 per cent of net small savings this year, an amount in excess of Rs 10,000 crore can be obtained for swapping past expensive debt. Another Rs 10,000 crore can be swapped using additional open market borrowings.

The finance ministry proposes the use of 30 per cent of small savings for swapping debt in the next fiscal. With additional open market borrowings at Rs 10,000 crore, an amount of Rs 30,000 crore can be used for debt swap.

In 2004-05, small savings worth 40 per cent can be used, and with the same among of open market borrowing, about Rs 40,000 crore may be available for debt swap.