The Hindu : Sinha gives relief for retiring employees

Online edition of India's National Newspaper
Thursday, Mar 21, 2002

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Sinha gives relief for retiring employees
By Our Special Correspondent

NEW DELHI, MARCH 20. The Finance Minister, Yashwant Sinha, announced today that retiring employees in both the public and private sectors would be allowed to invest their terminal benefits in the Reserve Bank of India's relief bonds without any ceiling. ``The existing cap of Rs. 2 lakhs will be lifted for this special category,'' he said.

Mr. Sinha also hinted that some concessions would be given when the Finance Bill is passed later in the session. However, he did not announce any rollback of budget decisions such as hiking the kerosene prices or reducing the tax exemptions on savings.

Defending his budget proposals for 2002-3 in the Lok Sabha after a 14-hour long debate, Mr. Sinha said the entire aim of the budgetary exercise this year was to contain the fiscal deficit. Referring to the ``unalloyed criticism on the budget proposals affecting the middle class,'' he said the aim was not to be popular but ``to protect the country's interests by taking a long-term view of the economy.''

Highlighting the constraints within which Finance Ministers have to work, he pointed out that as much as 90 per cent of revenue expenditure was ``rigid'' _ 48 per cent was accounted for by interest payments, 26 per cent by defence, 16 per cent by subsidies _ leaving but 10 per cent for establishment expenses. ``Where does the Finance Minister have any leeway,'' he asked the House.

In an hour-long speech marked by several interruptions by Opposition members, including Shivraj Patil and Mani Shankar Aiyar of the Congress, he defended himself against criticism that consumers had been affected by several measures, including the hike in petroleum products and the reduction in tax exemptions on savings. In this regard, he conceded that the criticism on the failure to contain the fiscal deficit was justified and he was extremely concerned about the issue. Many members had pointed out the failure to contain the deficit within the targeted 4.7 per cent this year _ now, it had climbed to 5.7 per cent.

Mr. Sinha said that it was for this reason that the entire aim of the budget this year was to keep the deficit within limits without taking any short-term populist measures. Noting that the Government could not be run on borrowings alone and referring to the growing debt burden on the exchequer, he said ``I do not want to create a problem for coming generations.''

Mr. Sinha appealed to the members for a political consensus on economic issues especially since there was already a broad consensus on reforms. Even on disinvestment, the present Government was only continuing a policy begun by the Congress Government.

Earlier, Mr. Patil who concluded the debate had observed that his party was also in favour of economic reforms but those that provided succour to the people and not those that hurt the weaker sections of society.

Mr. Sinha also conceded that there had been a deceleration in the growth rate though he was not prepared to accept the comparisons with previous regimes. At the same time, he felt that the Government had been able to deal with problems like surplus foodgrains by launching food-for-work and rural employment programmes like the newly-launched Jayaprakash Narayana Rozgar yojana.

Regarding pressures from the World Bank and the International Monetary Fund on budget formulation, he said the country's neighbours were implementing IMF structural reform programmes but his Government had never sought any assistance from these agencies.

The Lok Sabha later passed the vote on account for the first few months of the financial year 2002-2003 amounting to over Rs. 1,34,848 crores. The House also passed the supplementary demands for grants for 2001-2002 and the excess demands for grants for 1998-99.

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