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NEW DELHI, June 3

WITH refunds to corporates roughly at the same level as last year, the Centre's net tax receipts continued to be buoyant and stood around Rs 17,000 crore up to May this year, according to senior Finance Ministry officials.

Income and corporate tax refunds touched nearly Rs 5,000 crore with the payout being around the same level up to May 2001. A redeeming feature has been the Rs 2,000 crore drop in excise refunds.

The surge in excise collections during the first two months is being attributed mainly to the surcharge of Rs 6 per litre cess on petrol. Officials reckon that the buoyancy in revenues from this source is more of a "technical correction'' rather than a pointer to a recovery in the industrial sector. Revenues from customs have been higher due to the firming up of crude prices over the last three months.

According to data released by the Controller General of Accounts (CGA) tax revenues (net to centre) stood at Rs 2,087 crore, amounting to 1.2 per cent of the budget estimate of Rs 1,72,965 crore for 2002-02. In contrast, tax revenues (net) at the end of April 2002 amounted to just 0.1 percent of the budgeted amount.

The surge in revenues comes as a respite when viewed against the Rs 9,063 crore shortfall in net tax receipts during 2001-02 which pushed up fiscal deficit to 5.94 per cent of the Gross Domestic Product.

The slippage could have been higher in the absence of compression in Non-Plan expenditure. Actual Non-Plan expenditure stood lower than the revised estimates due to lower defence expenditure and interest payments.

Defence expenditure stood around Rs 54,400 crore-Rs 2,600 crore lower than the revised estimate for 2001-02. A lower interest payout is being attributed to higher premiums on the re-issue of bonds. Premium is deductible on interest payments on bonds.

With market borrowings amounting only to 98 per cent of the revised estimates, the financing of the additional deficit (i.e. 0.2 per cent) has been from the public account - primarily the Government of India Relief Bonds. Although the interest rate on these bonds is 8 per cent, the cost works out to around 11 per cent if adjusted for tax. This is because monies are invested in these bonds to avail of tax benefits.

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