Sinha for steps to reduce fiscal deficit

By Our Special Correspondent

NEW DELHI, AUG. 20. The Finance Minister, Mr. Yashwant Sinha, today conceded that the combined fiscal situation of the Centre and the States was a matter of concern and that concerted efforts would be necessary to bring the deficit down to acceptable levels. In this context, he solicited the support of all political parties in Parliament for the passage of the pending legislation on Fiscal Responsibility and Budget Management Bill which aims at reducing the fiscal deficit in a phased manner.

During an interaction with MPs attached to his Ministry, Mr. Sinha explained that among the major factors responsible for the high fiscal deficit was the burden of the Fifth Pay Commission award which worked out to three per cent of the gross domestic product (GDP), the rising interest burden and the shortfall on account of disinvestment targets. The Government's policy was to utilise the disinvestment proceeds for development of infrastructure, for public sector restructuring and for retirement of public debt.

The Minister agreed with the members that the reports of the Expenditure Reforms Commission on downsizing of Government should be acted upon urgently. All the reports of the Commission were expected to come in by September 30, he added. Mr. Sinha also apprised the members that the Government had evolved a plan to downsize its staff strength at the rate of two per cent annually by filling up only one per cent of the three per cent vacancies arising due to retirement of staff. Thus, there would be an effective reduction of two per cent every year, he said.

Mr. Sinha said the current slowdown in certain sectors of the economy was due to slackness in demand and that the Government was hopeful of a turnaround. The Government was taking steps to accelerate the budgeted productive expenditure by various Ministries. The reduction in interest rate would take some time to make an impact. He also agreed with some of the members that the large budgeted allocations for Central schemes needed to be made more cost effective so that the desired results could be achieved.

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