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Wednesday, Mar 01, 2006


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Fiscal improvement

I turn to the Budget Estimates for the next fiscal.

Expenditure & Deficit

Plan expenditure for 2006-07 is estimated at Rs 1,72,728 crore, up 20.4 per cent. As a proportion of total expenditure, Plan expenditure has increased from 26.6 per cent in 2004-05 to 28.3 per cent in 2005-06 (RE) and further to 30.6 per cent in 2006-07 (BE). This points to improvement in quality of Government expenditure. Non-Plan expenditure in 2006-07 is estimated to be Rs 391,263 crore. The increase of 5.5 per cent over non-plan expenditure in 2005-06 (BE) is due to normal growth and is one the smallest in recent years. In the Budget Estimates for 2006-07, the total expenditure is estimated at Rs 5,63,991 crore. I estimate total revenue receipts of the Central Government at Rs 4,03,465 crore and the revenue expenditure at Rs 4,88,192 crore. Consequently, the revenue deficit is estimated at Rs 84,727 crore which is 2.1 per cent of the GDP. The fiscal deficit is estimated at Rs 148,686 crore, which is 3.8 per cent of the GDP. I believe that I have redeemed my promise that the process of fiscal correction will be resumed in 2006-07.

Fiscal turn the corner

Mr Speaker, Sir, please allow me to draw your attention to two path-breaking developments on the fiscal front. Firstly, the strategy of enhanced revenue mobilisation through reasonable rates, better compliance and widening of the tax base is yielding tangible results.

For the Centre, the gross tax-GDP ratio, after rising from 9.2 per cent in 2003-04 to 9.8 per cent in 2004-05, has increased further to 10.5 per cent in 2005-06 (RE). Government estimates that, through better tax administration, it will increase to 11.2 per cent in 2006-07 (BE).

Secondly, the year 2004-05, for which the actuals are available, has proved to be a turning point. After 20 years, the Gross Fiscal Deficit is less than the Gross Budgetary Support for Plan in that year. What does this mean? This means that Government is not financing the Plan entirely through borrowing.

I was wrong

Last year, reluctantly, I pressed the `pause' button on fiscal correction. I had estimated the revenue deficit for 2005-06 at 2.7 per cent and the fiscal deficit at 4.3 per cent. I am happy to report that I have been proved wrong. We have improved upon both measures. According to revised estimates, the revenue deficit for the current year will be only 2.6 per cent and the fiscal deficit will be only 4.1 per cent.

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Stories in this Section
Rice processing


The lure of equity despite stretched valuation — Bias in favour of investments in MFs, insurance
No cheer for telecom users, service providers — Now, service tax on Net telephony
Domestic airlines get tax exemption for 1 more year
A new lease
Budget goes pro-investment; new taxes kept to minimum — FBT modified; small cars to cost less on duty cut; tobacco taxed
Boost to investment activity — Govt totally committed to fiscal prudence and continued reforms: Chidambaram
Central Plan outlay put at Rs 2,54,041 cr — Energy, social services & transport corner major chunk
Pay for more services
Metals: Reflected lustre
Big bonanza for the small car
A touch more than a stitch in time
Wiring up the nation
A few goodies for rural impetus, lower costs
Ramp up in resources for welfare
Tea industry hails allocation
Fiscal improvement
Let us make our destiny
Sighs of relief and dropped jaws — The FM seems content more at not ruffling many feathers
A shopper's day out
Small cars, ice-creams, colas cheaper; not so umbrellas, glassware

Taxes not recovered crossed Rs 1,11,000 cr
25 projects under e-gov plan
Services sector provides Rs 23,000 cr
Refractories: Marginally positive
No major reaction
Gathering pace
Judicious tinkering
Equity fund redefined
No special drive: auto parts sector
`There's further scope for reducing raw material duties to Asean levels'

Duty rationalisation for man-made textiles — More allocation for textile schemes; Rs 189 cr for textile parks
Excise duty cut, a boon for small carmakers — `Small cars' are Maruti 800, Wagon R, Zen, Alto, Hyundai Santro, Indica diesel
MFs keen to tap global opportunity
IT industry divided over impact of excise duty — Desktop, notebooks may turn costlier
Some habits don't die that easily
AMFI to seek clarifications on foreign investments
Towards a cutting edge tax system
Redeeming `Aam Aadmi'
Boost for Bharat Nirman
Charting a high-growth path
Calls everywhere, but search for energy
Succour for the old
Pinches more than it soothes
Accent on digitisation — The income-tax offices will undergo business process re-engineering
How the tax breaks pan out
Price cuts galore on small cars
Excise duty: Minor twists
Registrars, share transfer agents under service tax ambit — `12% levy is bad news for AMCs'
Tepid changes to corporate tax
Budget recedes in importance
The knowledge society
Investment boom
Let down on CST
The wind is blowing, take cover!
Thin attendance, minimal interruptions — Top CEOs at industry chambers largely non-committal
Corporates neutral to Budget proposals — It was on expected lines, say honchos
CUSTOMS DUTY
Offers in manufacturing, services
Boost for soya
MAT rates altered
Captains tuned in
`Fiscal deficit to come down'
`Good Budget for industry'
Stable tax structure welcomed
It'll promote export growth
Focus on rural sector
It gets 8 marks out of 10
Petroleum industry unhappy
Boost for auto sector
Duty cuts for plastics, hydrocarbons
Zero customs duty on set-top boxes to benefit manufacturers
Customs duty hike — Vanaspati industry disappointed
Wiring up India with highway networks
On the expressway
Higher allotment for highways
No relief for oil cos on pricing, duty structure
Pharma sector sulks as Budget ignores wish-list
A no-show for the pharma sector
`Not much for pharma sector'
Bleak outlook for pharma sector
More coal blocks for power sector
Budget disappoints shipping industry
Shipping management services expensive
Marginal duty cut for alloys, metals — Proposal to cut duty on mineral products to 5 per cent
Sugar sector feels let down — `No measures on de-control'
15 new services under tax net — Scope expanded in banking, financial services
If only consumers had lobbyists
Hails nod for tea protection fund
Tea industry hails allocation
Wah! Budget
`A boost to replantation'
`Will help exports'
Policy overhaul for coal sector
`No relief for domestic liquor players'
A mild choker
Additional excise irks cigarette cos
Tobacco shrugs off excise hike
FMCG prices to stay put
No reason to blush
Your small car will now be less expensive
Toyota not to hasten small car launch
Positive spin to auto ancillary
A ray of hope
Will colas be cheaper?
Priority in lending to food sector — Rs 1,000-cr corpus for refinancing loans
Priority sector status hailed
`Greater credit flow likely'
Of pasta, idli and dosa
`Expert panel to help gems sector'
`Viability gap funding' for semiconductor projects — New policy on cards to make India hub
`8% excise on packaged software not good'
`Hike in service tax a dampener'
A good fit for consumer
5 pc hike likely in landed cost
A fine cut for paper
Paper sector happy with excise cut
`Impetus for growth'
Constraint on raw material sourcing
Excise duty cut for paper products
`Likely to see flight of IP to tax-friendly nations'
Ice-creams cheaper? Maybe not all
Jute industry upset
Govt may dilute stake in non-navratnas
Going the extra mile for the farmer
Service tax, no hiccups for Concor
Service tax hike not to have inflationary impact
Bank deposits to get 80C deduction — Recapitalisation bonds to be converted into tradable securities
No bad news on income taxes
Tweaking the FBT
Fringe Benefit Tax provisions modified — India Inc not mollified, wants it to go completely
Outlay for tourism hiked
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