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Dr Ashok Lahiri

New Delhi , Sept. 17

PUTTING up a brave front, the Finance Ministry today said that it was premature to conclude that the Supreme Court's ruling against privatisation of HPCL and BPLC without seeking Parliamentary approval would lead to slippages in the Centre's fiscal deficit target for 2003-04.

Speaking to newspersons, the Chief Economic Advsior, Dr Ashok Lahiri, and the Additional Secretary (Budget), Mr D. Swarup, said that out of the Rs 13,200 crore receipts budgeted from disinvestment for the current fiscal, the Centre has so far mobilised about Rs 1,100 crore, of which Rs 900 crore was accounted for by the recent offer for sale in Maruti Udyog Ltd.

Mr D. Swarup

While maintaining that it was `still too early' to say whether Wednesday's SC verdict would adversely hit the budgeted realisations from disinvestment, the officials said that even in the event of this taking place, "one should not presume that would lead to the fiscal deficit going out of control".

Mr Swarup said that in most years, the disinvestment target set was never achieved and yet it did not really impact the overall fiscal deficit. During 2002-03, for instance, the Centre was able to realise only Rs 3,360 crore of the budgeted disinvestment receipts of Rs 12,000 crore. Any deficit in the disinvestment proceeds can be effectively bridged by higher revenue collections, both tax and non-tax, lower expenditure and a higher GDP growth figure.

He said that based on trends up to August, the Centre's fiscal targets were within course. The fiscal deficit during April-August 2003 was 34 per cent of the Rs 1,53,637 crore, budgeted figure for 2003-04. Gross tax collections (both direct and indirect) amounted to Rs 85,000 crore, which were about 10 per cent higher than the Rs 77,000 crore proceeds during April-August 2002. "This is lower than the 13-14 per cent budgeted growth. But the gap can be bridged in the second half," he said.

The officials said that the Government was planning to use the current high foreign exchange reserve levels to prepay costly loans. While during 2002-03, high cost currency pool World Bank and Asian Development Bank loans worth $3 billion were prematurely retired, during the current fiscal, it was planned to similarly prepay $2.9 billion worth of loans, of which $1.5 billion would be to bilateral and $1.4 billion to multilateral institutions.

Regarding restructuring of States' debts, Mr Swarup said that during 2002-03, States had resorted to prepayment of Rs 13,700 crore of high cost debts partly out of fresh market borrowings (Rs 10,000 crore) and the rest from small savings collections.

In the current fiscal, similar debt swaps of Rs 32,000 crore have already been concluded, of which Rs 23,000 crore has been through additional market borrowings made by the States for this purpose.

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