Yashwant Sinha to start pre-budget meetings today

By Our Special Correspondent

NEW DELHI, JAN. 4. It is budget time again in the Union Finance Ministry with the D-day of February 29 fast approaching. The Finance Minister, Mr. Yashwant Sinha, today started the formal process of budget making by holding a meeting with the Deputy Chairman of the Planning Commission, Mr. K.C. Pant, on the quantum of gross budgetary support to be provided to various Departments and State Annual Plans.

From tomorrow, the Finance Minister will begin consultations with various segments of the economy. Starting off with representatives of the agricultural sector and noted economists, over the next few days consultations have been scheduled with trade union leaders, representatives of small scale industries, consumer organisations, industrialists, financial institutions, scientists, representatives of the entertainment and media industry and, finally, with economic journalists. This exercise would probably constitute the widest consultations that any Finance Minister has held as part of pre- budget exercises.

The interaction at the level of the Finance Minister was preceded by intensive discussions between the officials of the Ministry with various industry organisations and chambers of commerce and industry. This too is a new feature of the pre- budget exercises because in the past, the industry viewpoint was solicited through memoranda presented by various industry segments. However, these bulky documents remained mostly unread, a senior official of the Ministry said.

There is little doubt about the focus that the millennium budget would contain. Having presented a widely- accepted budget last year, the Finance Minister now finds that apart from continuing with the rationalisation process for direct and indirect taxes, the most important task before him is controlling expenditure.

During 1999-2000, for a variety of reasons, including the prolonged spell of political uncertainty and the Kargil conflict, the resources position of the Government had turned out to be unsatisfactory.

Though revenues have been increasing as compared to collections in the preceding year, the rate of growth has not kept pace with the targets set in the budget. That apart, there have been shortfalls on account of the tardy public sector disinvestment exercise and expenditure overshoots in various sector such as defence, which received an additional Rs. 3,007 crores, and transfer to States of an additional Rs. 3,000 crores. In all, the Finance Minister has already sought Parliamentary approval for Rs. 14,323 crores as supplementary demands for grants.

The Finance Minister has also to contend with his promise of removing the surcharge on Income Tax that he imposed in the last budget. Similarly, the 10 per cent surcharge on basic customs duty is due to expire on March 31, 2000 and industry is expecting this additional levy to go.

Though balancing revenues and expenditures are the normal task of any Finance Minister, Mr. Sinha's problem is compounded because of the limited sources of fresh revenue generation. In case he imposes hard and harsh measures, the ``feel good'' factor will disappear from the economy, resulting in the whittling down of fresh investment. On the other hand, expenditures will continue to increase unless hard political decisions are taken to increase prices of essential items such as food, fertilizer, fuel and diesel.

During the consultations, therefore, the Finance Minister would be eagerly awaiting suggestions on how to manage this contradiction.

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