Lok Sabha passes Budget; internal debt is causing 'serious concern', says FM

Tara Shankar Sahay in New Delhi

BUDGET 2000

"Roll back," the Opposition and the Allies have been demanding for months now, in regard to the budgetary hikes in the prices of foodgrains. Little did they realise that Finance Minister Yashwant Sinha was on a roll, never to look back on his February 29 'unpopulist' proposals.

After months of sound and fury over the rollback issue, the Lok Sabha -- the lower house of Parliament comprising law-makers elected directly by people -- stamped its seal of appoval on Budget 2000 today.

The seemingly helpless Opposition staged a walk-out, making it seem a reaction to its gradual smothering by the Establishment. The official reason for the walk-out was that it was protesting against the government's refusal to rollback the hike in the prices of foodgrains sold through the public distribution system, liquefied petroleum gas and kerosene.

But that is fastforwarding the story. A spirited debate on Budget 2000 was witnessed in the Lok Sabha today.

With the Congress party backtracking on its resolve to push cut motions pertaining to the Finance Bill, the morale among the Opposition benches appeared low as was evident from the thin attendance of its occupants.

In contrast, the Bharatiya Janata Party and its alliance partners were present in full strength, making the passage of the bill easy for the government. Evidently, the BJP and its alliance partners had issued the whip to their members to be present in the house.

The finance minister deftly avoided mentioning the thorny issue of the price hike rollback by stressing on what he described as the government's significant achievements during its two-year duration.

The frequent interruptions by the Opposition members to Sinha's reply to the debate on the Finance Bill only helped him avoid the rollback issue.

In his reply to the debate, Sinha lashed out at the Congress for demanding rollback of prices. It was the Congress which had increased the prices of foodgrains and fertlisers four times between 1991 and 1996, he pointed out.

Except the Congress, which was then in power, other parties had the right to express concern over the price rise, he opined.

Madhavrao Scindia, deputy leader of the Congress in the house, said the people were reeling under the price hike and the condition of the people in Rajasthan and Gujarat was terrible due to the drought. He wanted to know what the government was doing to ameliorate their condition.

Sinha contended that the rollback was not feasible for the government because "14 per cent of the country's GDP is consumed by subsidies".

Sinha said the rising fiscal deficit ''is a national problem'' and it has to be tackled by all, including the state governments.

While external debt position was ''well within control,'' the internal debt was causing serious concern, he added.

He pointed out that the external debt was reduced to 4.4 per cent from 6.3 per cent. "It is the internal debt which we are bothered about." The fiscal deficit had to be tackled jointly by all, he contended, adding that from the 1996-97 figure of Rs 374.01 billion, it had escalated to Rs 736.46 billion in the current year.

Responding to Yerrannaidu of the Telugu Desam, Sinha reiterated that the subsidies given by the government were 14 per cent of the gross domestic product. The Expenditure Commission was going through the entire gamut of the subsidies. The paper prepared by the United Front government on subsidies would be examined by it, he added.

Making a spirited defence of his policies, Sinha said the entire economies of the state governments had 'collapsed' because of the implementation of the Fifth Pay Commission's recommendations.

They were finding it difficult to pay even salaries to their employees.

Whatever the chief ministers said in public, they were in agreement with the central government during one-to-one meetings to improve their economic performance, he added.

Delhi, however, has not given up and was in touch with all state governments and each chief minister had realised the devastating impact the payment problem was having on their state finances.

There was consensus among the state governments on the minimum floor rate on sales tax, he said. It is proposed to move to the Value Added Tax or VAT system from April 1, 2001, he said.

Sinha said his government was against any amnesty scheme as it demoralised the honest tax-payer as well as the tax authorities. His one-by-six criteria tax scheme and meeting various officials in different parts of the country and issuance of Permanent Account Numbers to assessees had helped unearth black money, he disclosed.

Sinha rejected Congress member N D Tiwari's contention that the government's Budget proposals were "dreamy" without any link to the "harsh realities". He dished out figures to prove that the government's GDP growth rate of 5.9 per cent in 1998-1999 was poised to reach greater heights.

Similarly, he stressed, its performance in the agricultural sector (four per cent growth) was better as compared to the Congress regime during 1991-1995 (3.5 per cent ) and the United Front government (3.9 per cent).

"I see no reason why this government should be apologetic in its achievement," Sinha told the house.

Rejecting the Congress claim that the performance of the economy had been dismal, Sinha said the average growth rate of the gross domestic product during the BJP-led governments in the last two years was 6.4 per cent, against 6.5 per cent during the Congress rule during 1992-96 and 6.3 per cent achieved by the United Front government.

The high GDP growth was possible mainly because of the strong performance on the industrial front, while the agriculture registered an average growth rate of four per cent. Undaunted, he pointed out that that the government had already distributed 5 million kisan credit cards and would further distribute 7.5 million such cards this year.

He also disputed that the tax-GDP ratio was declining. It was 8.2 per cent in 1998-99 and 8.9 per cent in 1999-00 against 10.8 per cent sin 1990-91.

Sinha said another positive factor was an improvement in the ratio between direct and indirect taxes, which had gone up to 33:65 in 1999-2000 from 19:78 in 1991-92. This was the result of the conscious policies being pursued by the government.

Credit was also due to the BJP-led rule for simplifying and rationalising central excise and customs. At present, about 86 per cent of the total revenue was under one single rate of CENVAT, Sinha said.

Patting the government on its back regarding roping in more income tax assessees, Sinha said their number in 1996-97 had hovered around the ten million mark. But under the Vajpayee government in 1997-98, 1.52 million new assessees had been added.

"I made the quotation of permanent account number ( PAN ) compulsory," the minister pointed out, adding that in 1998-99, 4.811 million additional income-tax assessees had been roped in and the figure as of now had crossed the 2 million mark.

During the last two years, the government had distributed 1.65 PAN numbers and the income tax department was setting up 33 computer centres for facilitating the initiative, he said.

"Because of the initiatives taken by this government, the number of the IT assessees will soon go up," he contended as the treasury benches thumped the desks.

The rates of customs duty had been reduced to four from seven but the problem of black-money generation had to be tackled with the combined force of the government and the Opposition parties, he said.

While underlining that the "Kar Samadhan" scheme was not an amnesty scheme, the minister said, "The large arrears of tax backlog had accumulated because I had inherited them from the previous government."

Referring to the Opposition's concern over mounting tax arrears, he said these were not accumulated in just two years. Thanks to the efforts of his ministry, the rate of increase had been arrested.

Dispelling apprehensions that the government was going soft on multinationals, he said Rs 6 billion was collected as tax from leading MNCs in 1998-99.

On the alleged misuse of the double taxation avoidance treaty with Mauritius, he said the government was going by the certificates issued by the Mauritian authorities in respect of individuals whether they were taxable in their country.

The finance minister took grave exception to the stock-market crash in Bombay, emphasising that " the way it has been behaving leaves much to be desired."

He came down heavily on the Bombay Stock Exchange for "responding to rumours " as a result of which it had suffered huge losses. He also took exception that he had been painted by the Opposition members in the house of "being a finance minister of the Bombay Stock Exchange."

He said he was not the finance minister of the BSE. At the same time, no finance minister can ignore the stock markets. "The behaviour of the BSE is silly,'' he said.

On zero tax paying companies, he said they had to pay 7.5 per cent Minimum Alternate Tax across-the-board and all exemptions had been done away with.

On the allegations that the government had lost Rs 20 billion worth of properties of the Modern Food Industries, he said the assets were valued only at Rs 1.09 billion. While the share value was Rs 1,000, it was sold for Rs 11,489. Further, it did not involve an asset sale, he clarified.

Referring to drought, he said there was no need for panic though the situation was difficult.

Sinha ended his speech by referring to the government concessions to the knowledge sector, profusely praising Prime minister Atal Bihari Vajpayee's leadership. He referred to the prophecy of Indian mathematician Bhaskaracharya (12th century AD) that "knowledge is God" and that India would use "computing machines to diffuse knowledge".

Additional reportage: UNI

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