Finance Minister Yashwant Sinha yesterday said the projected revenue targets would be met on account of the in-built cushion in the budget, hinted that all doors were not completely closed to foreign participation in the insurance sector and ruled out any loss in revenue due to the partial roll back of excise levy under petroleum.
In a post-budget interview to Business Standard, the finance minister also indicated that the government may pursue an accelerated, wider disinvestment programme than was indicated in the budget. He also maintained that the budget had evoked confidence in Indian industry and hence the government would be able to meet its projected growth target of 6.5 per cent in 1998-99.
The receipts cushion
The cushion has been built on the basis of a deliberate strategy to be conservative on the receipts side, specially under public sector disinvestment, Sinha said. In addition, the finance ministry had not taken into account any receipts accruing from the newly introduced samadhan scheme to unlock tax arrears tied up in litigation disputes.
"In the light of the experience last year, we have been very conservative on the receipts side. I am quite satisfied doing things this way. Because I don't want to be caught napping at the end of the year," he said.
On disinvestment, the minister said the government may net Rs 6,000 crore just from the sale of equity in four PSUs _ Indian Oil , Gas Authority of India Ltd, Videsh Sanchar Nigam Ltd and Container Corporation of India Ltd _ for which cabinet clearance has already been obtained and the lead managers too are in place.
"I have only taken a conservative estimate on the divestment receipts. I have specifically mentioned Indian Airlines and that we will reduce our holding in that company to 49 per cent. But, I have not taken any credit on the receipt side of any disinvestment that might take place.
Similarly, I have not taken credit for any other disinvestment programme to which I may have alluded in the budget and might take place as the year goes by," he said.
Similarly, the minister pointed out that he had not taken credit for receipts under the samadhan scheme.
"The scheme could get far more than what has been factored in on the receipts side. I have merely said for instance that Rs 950 crore would be lost by raising the exemption limit. This is something that I hope to make up through samadhan and better compliance," he said.
Insurance
Sinha desisted from making any categorical statement on a foreign presence in insurance and said the government believed in a step-by-step approach to liberalisation. "The position has been, which is what I have reflected in my budget speech, that insurance should be exposed to competition and it has been our long-held view that we should first try Indian competition."
Sinha then went on to indicate that the government was willing to consider foreign participation at a later stage. "As we had done first with civil aviation or various other segments _ first open it to Indian companies and subsequently when the time comes, open it to foreign competition.
Now, we believe in this step-by-step approach and that's why I announced that we will first open it to Indian companies. So we will cross that bridge when we come to it," he said.
The confidence factor
Claiming that the budget had enough proposals in it to infuse confidence in industry, Sinha maintained that the growth target of 6.5 per cent in 1998-99 would be attained comfortably.
"For the simple reason that growth is a function of confidence. And, what has been missing in the last two years is that confidence. And, I have reason to believe from the manner in which industry has welcomed the budget, that confidence will come back and there will be greater reason for activity on the part of Indian industry."
Sinha added, "We are also looking at the supply side. And, we feel that with greater money flowing into the system, it will be possible to step up demand and that should give the necessary stimulus to industrial growth. We expect agriculture to grow by a better percentage this year. And, services is a better growing sector. Hence, the growth rate of 6.5 per cent is not something that can't be achieved this year."
The political message
According to Sinha, the political message in the budget was for the rural sector and smaller cities. "I am getting reports from all over the country that people are very happy with this budget. So all of them are not influenced by the ups and downs of the sensex. They look at it from their own point of view and they are very happy that a lot has been done for agriculture, SSI and increased allocations," he said.
Continuing in the same vein, Sinha maintained that since the budget measures were targeted at these segments they lacked flamboyance and hence the budget was being dubbed anti-reforms in some quarters. "I have made some very courageous and strong moves on reforms which is being completely ignored. For instance, which minister in the past had been couraged to say what I have said in regard to public sector restructuring. And, the package we have for NRIs," he said.
impact
Sinha also dismissed claims that the budget which entailed record imposts of Rs 8,101 crore was inflationary. "To the extent that measures in the budget have impacted on products and commodities, prices will increase. But there is nothing in this budget that will have a cascading effect. For instance, we have not increased the price of diesel, which would have a cascading effect on transportation costs. Similarly, the railway minister has not raised freight rates," he said.
