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Debt rejig schemes to improve fiscal situation: FM

The FM said proposed debt restructuring scheme and cash management would improve the fiscal deficit for 2003-04.

business Updated: Mar 03, 2003 15:52 IST
Press Trust of India
Press Trust of India

Worried over the revenue deficit, Finance Minister Jaswant Singh on Monday said the proposed debt restructuring scheme of Rs 1,20,000 crore and cash management for various ministries would improve the fiscal deficit pegged at 5.6 per cent for 2003-04,

A bill to bring in constitutional amendments to enable states to share with Centre a portion of revenue from service tax and the Electricity Bill for furthering power reforms would be introduced in Parliament shortly, Singh said at CII's post-budget meeting.

The government was looking at the possibility of including WLL-based mobile phones under the 1X6 scheme of assessing Income Tax while re-examining the possibility to lower the minimum Rs 100 crore capital requirement for health insurance companies, he said.

Admitting that the high fiscal deficit was a matter of concern, Singh said "what worries me is the revenue deficit."

Although the government has curtailed expenditure to the tune of Rs 6,000 crore and introduced "cash management" system in major spending ministries, he said the government can not continue to spend more than what it earns.

The buyback of high-cost securities worth Rs 40,000 crore from banks would address the burgeoning non-performing assets in the banking sector, while the debt restructuring scheme would enable states to save up to Rs 83,000 crore, he said, adding "the Rs 1,20,000 crore debt reduction is bound to have a positive impact on debt recovery and fiscal management."

The initiatives taken in infrastructure building would spur economic activities, he said.

Government withdrew the dividend tax at the hand of recipients but levied a 12.5 per cent dividend distribution tax on corporates and mutual funds.

Singh said the stress given on infrastructure would boost economic activity and growth.

"The synergy created and the total economic effort realised if 3,000 km road project starts along with airports, ports and other infrastructure projects, will be huge," he said.

One of the priority areas of the government was agriculture, he said, adding "India has the largest irrigated arable land in the world. We have to be in the forefront of the world."

First Published: Mar 03, 2003 15:52 IST