The Hindu Business Line : Pressure points in economy review

WHILE the Finance Ministry's overall assessment of the economy is rather bullish, the Mid-Year Review also brings to light some major pressure points, particularly on the fiscal front.

During April-September 2003, the fiscal deficit at Rs 81,014 crore was way above the Rs 57,746 crore for the first half of the previous fiscal. Similarly, the revenue deficit has widened from Rs 47,604 crore to Rs 65,427 crore and the primary deficit (fiscal deficit net of interest payments) from Rs 8,794 crore to Rs 29,208 crore.

Further, despite a noticeable industrial revival, the Centre's revenues from excise have actually fallen from Rs 34,274.87 crore during April-September 2002 to Rs 33,703.79 crore during April-September 2003.

However, according to the Revenue Secretary, Ms Vineeta Rai, the picture has improved in October and by the end of the month, excise collections had crossed Rs 47,678 crore, up from last year's corresponding figure of Rs 43,814 crore.

Similarly, the increase in customs revenues has been only marginal (from Rs 25,706 crore in April-October 2002 to Rs 27,976 crore in April-October 2003), despite a huge jump in imports, suggestive of the upsurge in economic activity.

The other worrying development has been on the subsidy side, with the Centre's total subsidy outgo estimated at Rs 26,495 crore during the first half of 2003-04, compared with last year's corresponding figure of Rs 16,751 crore. The Rs 26,495 crore figure includes Rs 16,006 crore on food, Rs 6,703 crore on fertiliser and Rs 3,730 crore on petroleum.

Even when it comes to industry, there have been laggards such as textiles, with production declining in all segments except for jute goods.

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