Govt hints at cut in bank rate

Govt hints at cut in bank rate

NEW DELHI, MAR 3: The Government today hinted at a cut in the bank rate in the forthcoming credit policy to bring down the interest rates with a view to push up investments in the country.

Kumar discounted reports that the five per cent hike in surcharge on higher income tax brackets and cut in food and fertiliser subsidies would be rolled back.

''I don't think there is any possibility'' to rollback the surcharge or cut in subsidies, Kumar said, adding ''there is absolutely no scope.'' He also said increase in prices of urea would only workout to 60 paise per kg which would not hit the marginal farmers very dearly.

The guidelines for computing the MODVAT and CENVAT proposed in the budget would be announced soon, he said. This was a major departure in excise regime, he said, adding hitherto, the tax officials had the right to have their own valuation, but now they would do so in line with the ''policy of trust'' on the basis of self-auditing.

FISCAL DEFICIT: The Government may be able to reduce the fiscal deficit for the current year by a marginal 0.1 per cent and bring it to 5.5 per cent against the projected figure of 5.6 per cent in the Budget if it is able to cross its target of Rs 58,074 crore of direct tax collections by March-end.

The Government is hoping in this direction only on account of direct tax collections where the last date for payment of advance tax is March 15 this year. Further, by then even tax deduction at source (TDS) may come in. All this together may help it to achieve the targeted revised estimate of direct tax collection of Rs 58,074 crore. Till the end of February 2000, it has been able to collect Rs 39,356.57 crore, which has shown an increase of 16.64 per cent over the previous year's collection during the corresponding period.

Kumar said that keeping in view these factors, the Government might either cross its target of Rs 58,074 crore or may reach the target. There won't be any shortfall. If the target is crossed then the fiscal deficit will come down to 5.5 per cent, he said. Or else, remain at 5.6 per cent as projected in the Budget.

He said that till the end of February, total tax collections have amounted to Rs 13,8347.01 crore, compared to the total collection of Rs 11,8017.90 crore up to February 1999, registering an increase of 17.23 per cent.

Kumar said that the collection of income tax up to the end of February this year was Rs 18,405.31 crore compared to Rs 15,195.80 crore up to the end of February 1999, registering an increase of 21.12 per cent. Collection of corporation tax up to February 2000 is Rs 20,251.29 crore compared to Rs 17,418.45 crore during the corresponding period last year, registering an increase of 16.26 per cent, Kumar said.

On indirect taxes, Kumar said that the revenue receipts target of the current fiscal was of Rs 1,13,934 crore. Of this, customs share was to be Rs 50,369 crore and excise Rs 63,565 crore. The total collection till February 2000 has been Rs 98,990.44 crore compared to Rs 84,277.02 crore up to February 1999, registering an increase of 17.46 per cent.

Sinha on rates: India's Finance Minister Yashwant Sinha said on Friday he could not understand the recent volatility in the debt market and reiterated that he had created the necessary conditions for lower interest rates.

"I cannot understand why the market should react likethis," Sinha told Reuters when asked about a sharp fall in bond prices on Friday morning on market speculation that a rate cut was not imminent.

Sinha said he had created the necessary conditions for lower interest rates but it was up to the central Reserve Bank of India (RBI) to take a decision on the matter. "I have already said it is for the RBI to take a decision. I have created the necessary conditions... cut the general provident fund rate and removed interest tax," he said.