The Hindu Business Line : The secret of Jaswant's confidence

EVEN as the Union Finance Minister, Mr Jaswant Singh, generously handed out goodies to all sections of the society in two consecutive instalments this week despite taking a hit of anything Rs 10,000 and Rs 12,500 crore in revenue in a full year, his body language exuded confidence.

At the meeting with editors the other day, the Minister, while unveiling the schemes under `Panch Priorities', hinted that the way things are placed, the "arithmetical loss" in revenue may be more than made up in "athletic terms".

What is the secret of the Finance Minister's energy, sorry, optimism? Has there been a late and latent boost in revenue collections, which has come about unexpectedly? Perhaps.

Providing an insight into the arithmetic of the tax largesse is ICRA, the rating agency. Analysing the unexpected streak of benevolence, ICRA says that the revenue loss owing to the announcement of the tax sops "is unlikely to have any major impact on the fiscal deficit. This is because the projected growth of seven per cent in the gross domestic product (GDP) in the current fiscal will far outstrip the prospects of such loss," says ICRA.

The expectation is that the GDP growth may well be more. Agriculture is bouncing back, thanks mainly to the best rainfall in a decade during the 2003 monsoon, and quite a few other sectors are witnessing robust double-digit growth. And, more importantly, with the figures of the last quarter - usually the best for manufacturing companies - still in the making, the chances of a rosier growth rate may be a distinct possibility.

At least, the Finance Minister and his team do believe so. And they must be seeing it happen. Otherwise, why does Mr Singh view the Reserve Bank's growth projections as "far too conservative"!

Apart from the higher GDP growth expectation, there are some more positives that may be adding to the merriment. According to ICRA, the non-debt capital receipts, which is the sum-total of recovery of loans and advances by the Centre, as also the disinvestment receipts are likely to be buoyant in the current fiscal.

In particular, the recovery of loans and advances this fiscal at the end of November 2003 was higher than the budgeted estimates by a staggering 265 per cent.

As far as disinvestment receipts are concerned, with the target for 2003-04 being Rs 13,000 crore, the Government may net in a sizeable amount in the current fiscal through the successful part equity sell-off in the state-owned ONGC and GAIL. Not to forget the funds already mopped up through higher-than-usual interim dividends sought from public sector banks and other profit-making oil PSUs.

In tax collections, the year-on-year trends till the end of November last year shows that the growth rate at 12.7 per cent was marginally higher than the budgeted 12.2 per cent. The rating agency, however, believes that given the optimistic growth projections, the direct tax collections at the end of the last quarter of 2003-04 may be close to the Budget estimates.

Possibly, it could be more, given the fact that the last quarter yields the highest collection. And that explains Mr Jaswant Singh's optimism.