Money > Budget > Budget News & Analysis FEBRUARY 21, 2002 | 15:00 IST    rediff.com 


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'It will be a reform-oriented Budget'

Sheela Bhatt in New Delhi

"Reforms, reforms, reforms! India is poised to unleash more reforms. This one is going to be a reforms Budget," gushed a top government official, who is part of the Budget-making process.

However, striking a more sombre note, he said: "We know that the fiscal condition is alarming. So what can we possibly expect?"

When asked to elaborate, he said: "You see, we are not worried about external issues. I am talking about internal debt. India's internal debt is mounting. We are not comfortable with our debt situation. It is highly dangerous for the continued well-being of our economy and growth. But, rest assured the Budget will address these issues."

But will the new reforms thrust be more industry-oriented or agriculture-friendly?

"Agriculture. Our subsidies bills are mounting. We cannot escape this. And the sooner we face that fact the better."

When pressed for more detail, he reiterated, "It will be a reform-oriented Budget. Period."

"Nobody can change the fundamental policy now. More than 90 per cent work on the Budget is over. The rumours that a harsh Budget is expected if BJP and its allies lose in Uttar Pradesh is ridiculous," he laughed, when asked if the results of the UP Assembly polls would influence the Budget outcome.

Meanwhile, sources said that the Budget will also look to push forward India's decade-old privatisation programme. Analysts expect bold measures to put the government's ambitious drive in the top gear.

The privatisation programme has lost pace and consistently fallen short of targets. But experts say that with the government having embarked on a dramatic sell-off path in the past month, the momentum is set to continue.

Earlier reports too said that the finance minister may draw comfort from a low inflation rate and the burgeoning foreign exchange reserves, when he presents the Union Budget.

Sources hinted that the finance ministry may increase central funding by 35-60 per cent to the infrastructure sector including power, roads, irrigation and railways. The government is likely to extend the 10-year tax holiday to the housing sector.

On the corporate tax rates and minimum alternate tax fronts, chances of the government effecting a major change are said to be minimal. The finance minister is likely to adopt a three-tier graded customs duty structure and retain the movement towards a single rate structure, said sources.

The government is also likely to increase defence expenditure by a whopping 25-30 per cent to Rs 780-810 billion from Rs 620 billion, according to sources.

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