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Reforms to be broadened, deepened, accelerated, says FM

Finance Minister Yashwant Sinha said today that economic reforms would be deepened, broadened and accelerated in the regular Budget which would be presented shortly.

Presenting the interim Budget for 1998-99 in the Lok Sabha today, he said the regular Budget would seek to impart the necessary stimulus to agriculture and industry, restore dynamism to exports and encourage larger flows of foreign investment in line with the national agenda for governance.

Sinha said that the fiscal deficit for 1998-99 would be about six per cent of GDP, which was clearly not acceptable. The government would endeavour to bring it down to a reasonable limit in the regular Budget through appropriate measures.

The finance minister said that he would make an effort in the regular budget to strengthen the financial system and accelerate reforms in the public sector while building a strong and transparent system for public sector undertaking disinvestments.

He declared that immediate action was called for to contain the growth in establishment expenditure and initiate the process of PSU disinvestment at an early date to avoid shortfalls in receipts experienced in the previous years.

Sinha asserted that in the regular Budget, strict fiscal discipline would be brought about besides incorporating other new directions included in the BJP and its allies national agenda for governance.

He has proposed increasing the amount being devolved to the states collected under the VDIS by an additional Rs 32.15 billion.

Sinha proposed to devolve to the states 77.5 per cent of the revised estimates of VDIS collections for the full year 1997-98 instead of the earlier decision of devolving the same share collected up to the end of December 1997.

The proposed increase will take the total devolution on this account to Rs 75.94 billion in the current financial year instead of Rs 43.79 billion announced earlier.

The finance minister also proposed to provide an additional sum of Rs 10 billion by way of additional central assistance to states on account of externally aided projects in order to settle all pending claims in the current financial year.

Sinha said that these two decisions would give states an additional sum of Rs 85.94 billion in the current financial year. This, he said, was fully in accordance with the commitment in the national agenda to extend greater assistance to the states.

The finance minister also announced that a constitutional amendment bill would be brought forward to give effect to a recommendation by the Tenth Finance Commission proposing an alternative scheme for sharing of resources between the Centre and states. Under this alternative scheme, 29 per cent of the gross proceeds of almost all central taxes is to be assigned to the states.

Sinha said that a consensus in this regard was arrived at in the third meeting of the Inter-State Council held in July 1997 and has been endorsed by all the states.