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March 2, 2000
This isn't time for concessions to common man, says Sinha
Finance Minister Yashwant Sinha on Thursday said it was not the time for giving concessions to the common man as the government was facing a difficult situation arising from a ''silent war'' unleashed by Pakistan and other factors.
Asked why little was offered to the common man, the finance minister said the Budget was prepared under ''very difficult circumstances", particularly the requirement of the defence forces in the light of the Kargil experience and the interim award of the eleventh Finance Commission.
But for the Rs 140 billion higher allocation for defence and Rs 100 billion to meet the enhanced commitment to states due to the Finance Commission recommendations, the fiscal deficit would have been less than 4 per cent of the Gross Domestic Product or GDP.
The fiscal deficit for 2000-01 has been pegged at 5.1 per cent of GDP. In view of all this, ''there should not be any talk of concession...the world over nations are strong on the basis of the will-power of the people, not on the basis of people expecting concessions from the government,'' Sinha said.
''Despite the very difficult situation we are facing, I can only be accused of being modest with my additional resource mobilisition efforts. The reason why I have been modest is that I did not want to adversely impact on the revival of the Indian economy which is taking place,'' Sinha said.
When pointed out that former Finance Minister Manmohan Singh had reportedly said that the Budget lacked direction, Sinha said, ''I am sorry some people are spreading disinformation who unfortunately include two of my predecessors (Singh and P Chidambaram).''
In 1998-99, a 6.8 per cent growth rate was achieved. ''But I remember people were saying that we will not be able to cross 4 per cent. So, there is a lot of discounting we have to do to the predictions of the prophets of doom.''
He said the direction of the Budget was spelt out in seven points in the beginning of his Budget speech. These included strengthening the foundations of growth of rural economy, especially agriculture and allied activities, and nurturing the revolutionary potential of the new knowledge-based industries such as infotech, biotechnology and pharmaceuticals.
The other points were: strengthening and modernisation of traditional industries such as textiles, leather, agri-processing and the small-scale sector.
Mounting a sustained assault on infrastructure bottlenecks in power, roads, ports, telecom, railways and airways, according highest priority to human resource development through programmes and policies in education, health and other social services, with special emphasis on the poorest and weakest sections of society, strengthening the country's role in the world economy through rapid growth of exports, higher foreign investment and prudent external debt management and establishing a credible framework of fiscal discipline.
When pointed out that the lowering of interest rates on General Provident Fund would hit the common man, Sinha said that he had given indication about the measure in January itself when the interest rate on Public Provident Fund or PPF and small savings were reduced by one per cent.
Explaining the rationale behind the move, the finance minister said the interest rates the world over were related to the rate of inflation and it was the real interest which was taken into account.
In India, inflation had steadily remained below 4 per cent for 42 weeks during the current financial year, but the interest rate was 12 per cent which meant that the real interest rate was eight per cent.
Everywhere else, the real interest rate was only three to four per cent. ''There would have been a deeper cut'' in the interest if the global norm had been followed, he said.
With the move, the ''discrimination'' in the interest rates of GPF and PPF had been removed, the finance minister said. Asked whether the interest rate on EPF would also be brought down, he said EPF was managed by a trust which had to decide and make a suggestion to the government.
Sinha said the interest rate could not be looked at in isolation. ''We are in a fiscal mess because almost 50 per cent of the revenue collection is going for only payment of interest. So, like every prudent fund manager I have to look at ways and means of reducing my interest burden.''
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