Speaking at the 93rd annual general meeting of the PHD Chambers of Commerce and Industry, Sinha admitted that the fiscal deficit is likely to overshoot the target of 5.6 per cent. ``Direct tax collections are on target, but, indirect tax collections are falling short,'' he said.

The finance minister was responding to the statement made by O P Vaish, President, PHDCCI, that the fiscal position is under pressure with the deficit likely to cross 7 per cent and with the fiscal deficit of the States aggregated the figure is likely to be 11 per cent.

Sinha said that if he had the margin to take the deficit to 7 per cent, he would have no cause for worry and could comfortably ask his colleagues in other ministries to splurge without any worry.State governments and other ministries have been told that no excess allocations can be made over and above the amounts decided in the budget, he said. Sinha stated that the demands for grants has been reined in at Rs 1,300 crore.

Indirect tax collections are low with excise collections much below the estimates as the manufacturing sector is facing a slowdown, Sinha said.

Customs revenues have also been hit on account of low oil prices in the international market, he said. He drew attention to the fact that the fiscal deficit during the eighties and early nineties had been in excess of 6 per cent.Pressure on the fiscal deficit is mounting as savings are flowing into government-guaranteed bonds in greater volume, he said. ``This problem was not before the government when the capital market was doing well some years ago,'' Sinha added. The only way by which the capital market can be revived is by wooing the small investor back into the market, he said. The minister exhorted industry to come forward and paywhat is due to the government. ``The government will not like to increase rates as industry is going through a negative phase,'' he said. Sinha said that in the budget for the next fiscal indirect tax rates will be further rationalised and simplified. He appealed that while there are some inadequacies in the input-output norms for many sector, industry should not take advantage of this. ``Only when industry cooperates that government can help reciprocally,'' Sinha underscored.

Speaking about the government's inability to get any major legislation passed in the current session of Parliament, Sinha said that it was unfortunate that a small minority has been able to stall the legislative process. ``It is unfortunate that the sentinels of the Jurassic Park era are unable to reconcile to demands of the modern world,'' he said.

There is an opinion that the worst is now over, as the global growth rate according to the IMF has been pegged at 2.2 per cent, he said. The second half of the fiscal year is likely tobe brighter than the first half and 1999 will be better than 1998, he declared confidently.