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Friday,
February 28, 2003, Chandigarh, India  
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States’ fiscal deficit rises to 4.6 %
A look back at Budgets — II
Disinvestment target to be missed: Survey |
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SSI, automobile log growth in exports
Haryana is all set to introduce VAT
Ind-Swift gets nod for new drug
Azim Premji richest Indian: Forbes
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States’ fiscal deficit rises to 4.6 % New Delhi, February 27 The fiscal deficit of state governments increased from 3.3 per cent of GDP in 1990-91 to 4.6 per cent in 2001-02. Higher growth of revenue expenditure has largely contributed to this deterioration. The revenue deficit has nearly trebled from 0.9 per cent of GDP in 1990-91 to 2.6 per cent of GDP in 2001-02, the survey said. Revenue from states’ own taxes witnessed a marginal improvement from 5.3 per cent of GDP in 1990-91 to 5.8 per cent of GDP in 2001-02. This shortfall in growth of Central tax revenue has partly constrained the growth of total revenue receipts of states. In the state budgets for 2002-03, the fiscal deficit is budgeted to come down to 4.2 per cent of GDP as compared with the fiscal deficit of 4.6 per cent of GDP in the previous year. The revenue deficit is budgeted to come down from 2.6 per cent in 2001-02 to 2 per cent in 2002-03, the survey said. The deterioration of the states’ fiscal situation was primarily on account of continuing imbalances between revenue receipts and expenditure. The shortfall in Centre’s tax revenue had also adversely impacted the state finances through lower transfers. State level fiscal reforms have been initiated in the states of Punjab, Kerala, Karnataka and Maharashtra by bringing in Fiscal Responsibility Bills. The 11th Finance Commission had recommended a monitorable fiscal reform programme for all the states. Fifteen per cent of the revenue deficit grant, meant for 15 states during 2000-05, and a matching contribution by the Central Government were recommended to be credited into an incentive fund for distribution as grants for all the states based on their fiscal performance. “So, far 18 states have drawn up medium term fiscal reform programmes, in consultation with the Central Government. The fiscal reforms cover areas such as fiscal consolidation, public enterprise reforms, power sector reforms etc,” the survey said.
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A look back at Budgets — II The Congress party came back to power and Mr R. Venkataraman presented the annual budgets for 1980-81 and 1981-82. Later he became Defence minister and still later became the Vice President and ultimately President. He has been the only Finance Minister who became Vice President and President. Then there was a break in tradition. Mr Pranab Mukherjee became the Finance Minister. Till then only members of the Lok Sabha were finance ministers and Mr Mukherjee was a member of the Rajya Sabha. He presented the budgets for 1982-83 to 1984-85. Mr V.P. Singh (then in the Congress) presented two budgets for 1985-86 and 1986-87. The next the budget was presented by Mr Rajiv Gandhi, who was also the Prime Minister. He was the third Prime Minister to present a budget after Mrs Indira Gandhi (his mother) and Mr Jawahar Lal Nehru (his grandfather). It was, for the 1987-88 budget he presented, exercises began to make the budget zero based. Zero base budgeting in the country was introduced in three phases — one third of the budget was zero based in the first year, two thirds in the second year and fully zero based from the third year. Zero based budgeting is a continuous process. (A dictionary of economic terms defines zero base budgeting as a process of review, analysis and evaluation of each budget request in order to justify its inclusion or exclusion from the integrated whole budget finally approved. Allocations in the previous year are disregarded in making decisions, it adds). The Finance portfolio was later held by Mr N.D. Tiwari who presented the 1988-89 budget and Mr S.B. Chavan 1989-90 budgets. The third non-Congress ministry came to power and Mr Madhu Dandavate presented the 1990-91 budget. The Congress regained power and Mr Manmohan Singh presented five annual budgets - 1991-92 to 1995-96. His budgets had an orientation different from those of all the previous budgets. He opened the economy and encouraged foreign direct investments. He reduced the peak import duty from 300 plus per cent to fifty per cent in phases. He will be remembered best for making the rupee convertible in just two phases. In the pre-nineties, foreign exchange in India was so scarce that its outflow had to be regulated. After Mr Manmohan Singh’s reforms, foreign exchange inflow increased so much that steps to manage it have become necessary. His reforms are called ‘first generation reforms’ and his successors irrespective of the party have been trying to continue it only calling it second generation. He introduced tax on services. During the next Congress ministry Mr P. Chidambaram presented two budgets. He announced yet another voluntary disclosure of concealed income scheme. This VDS was introduced in the 1965-66 budget by Mr T.T. Krishnamachari and was said to be a one time scheme. But it was brought some more times. Owing to political developments, Mr Chidambaram’s second budget was passed without debate in a special session. Mr Yashwant Sinha has presented the annual budgets five times from 1998-99 to 2002-2003. Mr Manmohan Singh concentrated on import duty. Mr Sinha took the task of reforming the excise duty structure. He reduced in phases the eleven slabs to just one. Mr Jaswant Singh is the 25th holder of the finance portfolio. But he is the 23rd minister who gets an opportunity to present a budget. Mr K.C. Neogy and Mr H.N. Bahuguna held the portfolio for such short duration that they had no occasion to present a budget. The budget for 2003-2004 is the 56th Annual budget. But in these years, interim budgets had been presented on 11 years and on four occasions permission had been sought to levy new taxes and these may be described as extra budget. Interim Budgets The first budget for period August 15, 1947 to March 1948 was described by the then Finance Minister himself as a interim budget. The first elections were held in the period spanning October 1951 to February 1952. Mr C.D. Deshmukh presented a budget to the then provisional Parliament on February 29, 1952. The Parliament elected on basis of adult franchise met in April 1952. So the Finance Minister presented the final budget for 1952-53 on May 23. He said that “I deem it a great privilege to present this budget to the first Parliament elected under the Constitution.” This was a formality, because the interim budget presented in February earlier was presented again. The second general election was held in February-June 1957. So Mr Krishnamachari presented an interim budget in March 1957 and the final budget in May that year. The third election was held in February-June 1962. He presented an interim budget for 1967-68 on March 1967 and the final
budget in May that year. The fifth election was in March 1971. So Mr Desai presented an interim budget in March and the final budget in May that year. The sixth election was held in March 1977 and the Janata Party assumed office. The budget for the year had to be presented and at the end of March 1977. Mr H.M. Patel presented an interim budget. In just 800 words, he said that the budget papers as presented were prepared under directions from the previous ministry. “They do not reflect our (Janata Party’s) philosophy, policies and programme.” He presented the final budget for that year in June. After the seventh general election in January 1980, the Congress formed the Ministry and Mr R. Venkataraman became the Finance minister. He presented the interim budget for 1980-81 in March 1980 and the final budget in June that year. The eighth election was held in December 1984 and the ninth election in November 1989. No interim budgets were presented. The tenth election was held May 91. Mr Yashwant Sinha presented an interim budget for 1991-92. In the elections the Congress party regained power and the final budget for 1991-92 was presented by Mr Manmohan Singh. That was the first occasion when an interim and final budget was presented by two ministers belonging to two different parties. After the elections in 1996, a coalition ministry assumed office. The interim budget had been presented by Mr Manmohan Singh in February 1996 and the final budget by Mr P. Chidambaram in July 1996. After the elections in 1997, Mr Yahswant Sinha presented an interim budget in March 1998 and the final budget for 1998-99 in June. The budget for 2003-2004 is due at the end of February 2003. It is expected to be soft being the budget for a pre-election year. But no dictionary has defined “a soft budget.”
- Concluded
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Disinvestment target to be missed: Survey New Delhi, February 27 During the period April to December 2002, a sum of Rs 3,122 crore was realised by way of such receipts. While the quantum of receipts so far by way of disinvestment of PSUs is less than the target, it should be viewed in the context of the need “to develop a consensus around the key issues”, the Survey said. In the current financial year strategic disinvestment by way of sale of Government’s equity has taken place in 13 PSUs up to December 2002. These PSUs are Hindustan Zinc Limited, IPCL, 10 hotels, under ITDC and one hotel of the Hotel Corporation of India. Apart from this, the Centre received a control premium from Maruti Udyog Limited of Rs 1,000 crore. The remaining 26 per cent shareholding of the Centre is Modern Food Industries (India) Limited has also been disinvested through exercise of a put option for Rs 44.1 crore. “It is only from 1999-2000 that emphasis of disinvestment changed in favour of strategic sale”, the survey said. The primary objective of disinvestment, especially through strategic sale route is that with the transfer of management control into private hands, private capital and management practices would be used effectively to increase the operational efficiency of the company. “Evidence suggests that there has been improvement in the efficiency of PSUs after disinvestment”, it said.
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SSI, automobile log growth in exports New Delhi, February 27 Emphasising the need for dereservation of the SSI sector, the survey said the reservation was hindering the development of efficient economies of scale while firms in China were able to compete effectively in the international and Indian markets. According to the survey, despite the global and domestic recession, small scale industries had registered a higher growth rate than the overall industrial sector in terms of number of units, production, employment and exports. The number of SSI units in 2002-2003 is estimated to have increased to 35.72 lakh from 34.42 lakh in the previous year, registering an increase of 3.8 per cent. Exports also surged by 28.7 per cent to Rs 69,797 crore during 2000-01 from Rs 54,200 crore a year earlier. However, to effectively face global competition in the wake of free imports following the removal of restrictions under the WTO agreement, the process of phasing out of the SSI reservation in consultation with stake holders would constitute an important element of the policies that foster efficiency and productivity in India, the survey said. Regarding the automobile sector, the survey noted that this sector had performed extremely well in 2001-02 and in the current year. Citing reasons for the sharp growth of the sector, the survey said it was partly driven by the impact of the lower interest rates on demand, intermediated by a competitive financial sector which has steadily cut prices of automobile loans as the interest rates went down. Automobile exports registered a growth of 71.8 per cent and 215.4 per cent in three wheelers, it said.
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Haryana is all set to introduce VAT Chandigarh, February 27 According to informed sources, with the introduction of VAT, Haryana is likely to incur a loss of Rs 500 crore per annum because the rate of central sales tax (CST) will be reduced by 0.5 per cent to 2 per cent. At present, Haryana gets about Rs 1000 crore as CST. The Centre has linked the abolition of CST with the introduction of VAT in the country. However, the sources say the state has no immediate cause for worry on this account because in the first year the Centre would compensate the state to the tune of 100 per cent for the loss of CST. The state’s worries would start from the 2003-04 financial year when CST would be reduced to 1 per cent, but the Centre’s contribution will be only 75 per cent. In the third year of the scheme, the CST would be abolished completely and the Centre’s help would be reduced to only 50 per cent. From the fourth year, there would be no help from the Centre. The Chautala Government may not like to raise the general rate of sales tax this year or the next year because these would be election years for the Lok Sabha and the Assembly. To reduce the paper work of small traders, the Haryana Government is likely to introduce a scheme under which the traders having a turnover of certain amount can opt for a fixed percentage of tax, linked to their turnover. They would not be required to keep any accounts. The sources say under VAT tax slabs would be reduced from the existing seven to four. They also say that since VAT improves tax compliance, the revenue generation would be more even without raising tax rates. There will be a provision for tax credit to registered dealers, who will also be able to carry it over to next month or quarter if their credit exceeds the tax collected by them. For the goods exported out of the country, the entire tax paid within the state would be refunded. However, in the case of stock transfer, tax paid on goods purchased in the State will not be eligible for refund. Similarly, the tax paid on inputs procured from other states through stock transfer or purchased in the course of inter-state trade will not be eligible for credit. Registration will be compulsory for dealers having a turnover of Rs 1 lakh. They would be issued an 11-digit taxpayer’s identification number (TIN), which will be unique in the entire country. The sources say though the abolition of CST will hit Haryana badly, it will also be beneficial to the state indirectly. Being a small state, the entire production of a big industrial unit cannot be consumed within Haryana alone. Such a unit has to pay CST both on raw material purchased from outside the state and goods sold outside Haryana. With the abolition of CST, a big impediment in the industrialisation of the state, industries would be tempted to come to Haryana on a large scale, given the its proximity to Delhi, the major centre for raw material as well the transit point for sale of goods to other states.
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Ind-Swift gets nod for new drug
Chandigarh, February 27 Ind-Swift is the first Indian company to receive the approval for this drug after the Originator. The company plans to launch the drug in the next quarter. Mr V.K. Mehta, Director, said “The product has been developed keeping the patient’s convenience in mind. Being the first company after the originator to launch this product, we plan to capture sizeable market share in this segment”.
TNS
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Azim Premji richest Indian: Forbes Singapore, February 27 India was behind Japan, which produced 19 billionaires and Hong Kong which had 11 billionaires in the list from Asia. Azim Premji acquired Numero Uno position in the Indian list with assets valued at US$5.9 billion, according to the list. Premji, who has software business, was ranked fourth in the overall Asian list. Mukesh and Anil Ambani of Reliance were second with US$2.8 billion worth of assets in diversified businesses. The list showed that billionaire Kumarmangalam s US$2.4 billion assets were in commodities, Lakshmi Mittal s US$2.2 billion assets in steel, Pallonji Mistry s US$2 billion assets in construction business, Adi Godrej s US$1.1 billion assets in diversified businesses and Shiv Nadars US$1 billion assets in technology.
UNI
Satyam opens recovery centre SINGAPORE:
Satyam Computer Services today announced the expansion of its software development centre here besides setting up of a disaster recovery centre in the city-state. The centre, with a capacity to house up to 1,000 specialists, will allow the company to continue essential functions in case of an emergency at its base in Hyderabad.
UNI
Nestle posts 13 pc rise in net VEVEY,
SWITZERLAND: Nestle said today that its net profit rose by 13.2 per cent in 2002 to 7.56 billion Swiss francs $ 5.6 billion compared to a year earlier. Sales by the group reached 89.16 billion Swiss francs, or 5.3 per cent more than in 2001, the group said in a statement. Nestle said it expected to continue to improve its performance in 2003.
AFP
ABB reports $ 787 million net loss ABB said in a statement that its losses were mainly due to its provisions for asbestos litigation in the USA, the sale of its Structured Finance Division last year, and operational losses in the oil, gas and petrochemicals unit which is due to be sold in 2003.
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bb
Direct selling Tata Tea Krishi Cards SBI gold scheme |
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ZURICH: ABB today reported a net loss of $ 787 million in 2002, against a loss of $ 691 million a year earlier.