Revenue Deficit To Top Rs 31,475 Cr

Stating that the revenue deficit will increase by about 245 per cent during the year as compared to 1987-88, when it stood at Rs 9,137 crore, the foundation has exhorted the government to tread a cautious path while undertaking revenue expenditure.

Citing an example, senior economist of the foundation K R Viswanathan says expenses incurred by the government on the council of ministers between 1991-92 to 1996-97 by way of salaries, tour expenses, police, general and other administrative services have gone up seven fold.

Similarly, he says in a report brought by the foundation on the budgetary proposals for the current financial year, the expenditure on police has shot up from Rs 2,132.78 crore in 199-91 to an estimated Rs 4,368.47 crore in 1996-97, up 10 per cent. Interest payments in absolute figures shot up from Rs 26,596 crore in 1991-92.

 

to an estimated Rs 52,000 crore in 1995-96 and Rs 60,000 crore in current financial year.

Interest payment obligations in percentage terms are estimated to have shot up by about 126 per cent between 1991-92 and the budget estimates for 1996-97.

As a proportion of the total expenditure of the government, interest payments have increased from about 23.9 per cent in 1991-92 to 29.3 per cent estimated in 1996-97, the study observes.

Cautioning the government against a run away increase in debt, the research foundation says that from past experience the political exigencies have encouraged the government to sanction loans to farmers and interest relief to riot victims, only to write them off along with interest later.

The foundation has expressed the hope that the expenditure management and reform commission comes out with measures to stem the rot, saying that otherwise whatever benefit that might accrue on account of economic reforms will be frittered away, leaving the present and future generations to bear the brunt of internal and external debt.

On the proposal for mopping up Rs 5,000 crore by way of disinvesting public sector equity holdings during 1996-97, the foundation has expressed scepticism that the proposed disinvestment commission would be able to influence the flow of funds through this channel at least for the first two tranches.

The resources through the public sector disinvestment routes proposed to be undertaken in three tranches during the current financial year.

The foundation also expressed concern on the decline in central assistance to states and union territories which it says has gone down from 12.4 per cent in 1991-92 to 9.7 per cent estimated in 1996-97. It stood at 12.9 per cent in 1994-95 and 10.8 per cent in 1995-96.

Although total central assistance for the plans of the states and union territories increased from Rs 13,865 crore in 1991-92 to Rs 20.703 crore in 1994-95, it declined to estimated Rs 19,854 crore in 1995-96. It is placed at Rs 21,972 crore in 1996-97.

In the budget estimates for 1996-97, finance minister P Chidambaram places the total expenditure of the government at Rs 2,04,660 crore, which is higher by Rs 21,656 crore or 11.83 per cent of the revised estimates of the financial year 1995-96.

The revised estimates for 1995-96 places the expenditure at Rs 1,83,004 crore, which was higher by Rs 10,853 crore than the budget estimates at Rs 1,72,151 crore the study observes.