Finance Minister Jaswant Singh's action taken report for 2003-04 has little to state on some crucial issues like implementation of a value-added tax regime, viability gap funding, setting up of a divestment fund and an asset management company to take care of residual equity sale in public sector undertakings.

VAT first figured as a promise in the Budget for 2001-02 during Yashwant Sinha's tenure as the finance minister. Subsequently, it found a mention in every finance minister's budget speech.

The crisis over VAT: Complete Coverage

In the Budget for 2003-04 too, Singh had extolled VAT as a historic reform measure in the domestic trade tax system that would assist states to make a transition from a sales tax system to a modern VAT regime.

Two important notifications, one, to enable states to charge sales tax not exceeding 4 per cent on sugar, textiles and tobacco, and two, to cut the Central sales tax rate for inter-state sale to 2 per cent, have been held back pending introduction of VAT.

The empowered committee of state finance ministers had in its last meeting in October 2003 recommended against the move since they were linked to introduction of VAT.

In his ATR, Singh blamed the unpreparedness of states with regard to non-conformity with the legislative requirements and other procedural and infrastructural needs.

He has also explicitly given VAT a political colour by stating that a new roadmap would now be drafted in consultation with the principal political parties and the empowered committee. Hitherto, it was only the empowered committee, which was responsible for ironing out the differences between states on VAT.

What is shocking though is that Singh has not made any allocation for VAT in his interim Budget for the next fiscal. He had earmarked Rs 700 crore (Rs 7 billion) in the budget estimate for the current fiscal for VAT, but knocked it off in the revised estimates.

Singh's promise for the core sector in his debut Budget was an innovative funding mechanism wherein the government would chip in to meet the shortfall between the anticipated revenue and loan repayment liabilities.

His Budget announcement entailed a Rs 60,000 crore (Rs 600 billion) big-ticket spend for 48 road projects, Golden Quadrilateral project of National Rail Vikas Yojana, upgradation of two airports and seaports and setting up of two convention centres.

But apart from an equity contribution of Rs 500 crore (Rs 5 billion) for Rail Vikas Nigam Ltd, the viability gap fund, has not seen any outgo. The balance Rs 1,500 crore (Rs 15 billion), of the Rs 2,000 crore (Rs 20 billion) viability fund for 2003-04, has remained unspent.

This being the state of affairs of core sector investments, Singh actually talked of a plan to catalyse Rs 1,10,000 crore (Rs 1,100 billion) investment in infrastructure, small and medium industry and agriculture in January.

Singh has also conveniently postponed the operationalisation of the divestment proceeds fund till the elections are over and a new government is in place.

Though divestment proceeds are targeted at Rs 14,500 crore (Rs 145 billion) for the current fiscal, a fund can be expected to be operational only by July 1. The fund, among other things, was mooted to fund public sector restructuring, retire public debt, build infrastructure and finance fresh employment opportunities.

While UTI Mutual Fund was mandated to be the asset management company for holding residual shares of PSUs post divestment, the ministry has not yet finalised the operational details. Finance ministry officials said, both the AMC and the Fund would have to wait for the outcome of elections.

These apart, the much-talked about restructuring of the finance ministry, especially the department of economic affairs, has also not taken a final shape.