NEW DELHI, FEB 27: The government today asserted that the budget was not inflationary saying the rationalisation of indirect tax structure would not push up prices as excise rates on a large number of items have been reduced.At the customary post-budget press conference, the Finance Secretary, Vijay Kelkar said the hike in diesel prices would have only a marginal impact on inflation. ``But one has to take into account the fact that diesel prices were reduced last month and the cess of Re 1 per litre imposed on diesel would restore the old price resulting in very little impact on inflation,'' he said.Kelkar maintained that the market borrowings would come down by between Rs 8000 and Rs 9000 crore besides 0.9 per cent reduction in fiscal deficit during 1999-2000.
He said the rationalisation of excise and custom duty were rule based and that no attempt has been made to tinker with it. The entire tax reforms in excise in the budget was revenue neutral, Kelkar said.
Giving details of the reforms, RevenueSecretary Javed Chaudhury said the across the board 10 per cent surcharge on corporate and personal income tax would accrue a net revenue of Rs 3,100 crore while the 10 per cent surcharge on customs would result in a net revenue of Rs 1,469 crore.
Kelkar said the amount of Rs 10,000 crore through disinvestment of public sector undertakings was sought to be raised through strategic sales which could also mean outright privatisation of some of the companies.
He said 26 per cent strategic sales would also be through the GDR route.On the decision to impose tax on stock options, the Chairman of Central Board of Direct Taxes, Ravi Kant, said only the market value of the option has been made taxable and the original value of stock options provided for industrial workers were not taxable.
On efforts to cut expenditure in budget, Expenditure Secretary E A S Sarma said the budget for the first time has attempted to introuce zero based budgeting even though the proposal has been mooted since 1986.
He said theeffort of the government to converge many of the overlapping schemes with both central and state government projects was a step towards zero budgeting and many of the recommendations made by S R Hashim committee have been implemented. Chief Economic Advisor Shankar Acharya said the budget seeks to reduce the fiscal deficit by 0.6 per cent besides reducing the market borrowings by between Rs 8,000 crore and Rs 9,000 crore.
These, he said, were ``movement towards low inflation.'' The impact of the 10 per cent increase in the prices of diesel would have very minimal effect on inflation, he added.
Acharya said the nominal GDP growth (growth plus inflation) for 1999-2000 has been projected at 13 per cent.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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