HIGHLIGHTS

    RS. 7594 CRORE TO BE DEVOLVED TO STATES UNDER VDIS IN 1997-98

RS. 1000 CRORE MORE TO BE GIVEN AS ADDITIONAL CENTRAL ASSISTANCE TO STATES IN CURRENT FINANCIAL YEAR

CONSTITUTIONAL AMENDMENT BILL TO BE INTRODUCED SOON TO GIVE EFFECT TO ALTERNATIVE SCHEME FOR SHARING OF RESOURCES BETWEEN CENTRE AND STATES

INTERIM BUDGET SEEKS TO CONTINUE EXISTING TAX STRUCTURE

FISCAL DEFICIT PEGGED AT 6.1 PER CENT FOR CURRENT FINANCIAL YEAR

NET TAX REVENUE FOR CENTRE SHOWS A SHORTFALL OF 12.6 PER CENT

LARGE SHORTFALL IN DISINVESTMENT RECEIPTS GROWTH IN ESTABLISHMENT EXPENDITURE TO BE CONTAINED; PROCESS OF PSU DISINVESTMENT BEING ACCELERATED AND MADE TRANSPARENT

ECONOMIC REFORMS TO BE DEEPENED, BROADENED AND ACCELERATED

BUDGETARY SUPPORT PLAN AT RS. 64461 CRORE LEVEL; CONTENT AND LEVEL OF BUDGETARY SUPPORT FOR THE ANNUAL PLAN 1998-99 TO BE REVIEWED IN THE REGULAR BUDGET

    REGULAR BUDGET WILL SEEK TO IMPART NECESSARY STIMULUS TO AGRICULTURE AND INDUSTRY, RESTORE DYNAMISM TO EXPORTS AND ENCOURAGE LARGER FLOWS OF FOREIGN INVESTMENT REGULAR BUDGET TO STRENGTHEN FINANCIAL SYSTEM, IMPROVE INFRASTRUCTURE AND BRING STRICT FISCAL DISCIPLINE
 
 

    The Interim Budget for 1998-99 presented in Parliament today by the Union Finance Minister Shri Yashwant Sinha underlines the Government's commitment to extend greater assistance to States and contain fiscal deficit at reasonable limits. With a deep resolve to build India free from hunger, poverty, unemployment and deprivation, Shri Yashwant Sinha announced that the economic reforms will be deepened, broadened and accelerated. Introducing the Finance Bill, the Finance Minister said that the existing tax structure will continue for a full year. However, the Demand for Grants and the Annual Financial Statement, which are for the full financial year, will be revised and finalised at the time of presentation of the regular Budget.

    Referring to the collections under Voluntary Disclosure of Income Scheme (VDIS), the Finance Minister proposed to devolve to the States 77.5 per cent of the Revised Estimates of VDIS collection for the full year 1997-98 instead of the earlier decision of devolving the same share collected upto December 1997. This increase will take the devolution under VDIS to Rs.7,594 crore in the current financial year instead of Rs.4,379 crore announced earlier. Shri Yashwant Sinha also provided an additional sum of Rs.1,000 crore by the way of Additional Central Assistance to States for externally aided projects to settle all pending claims in the current financial year.

    The Finance Minister announced that the Government will bring forward a Constitution Amendment Bill to give effect to the recommendation of the Tenth Finance Commission which has suggested an alternative scheme for sharing of resources between Centre and States. Under this scheme 29 per cent of the gross proceeds of almost all Central taxes is to be assigned to the States.

    Expressing concern over the economic situation the Minister said that the overall economic growth has slowed to 5 per cent in 1997-98, agriculture registered a negative growth of 2 per cent , industrial growth averaged at 4.6 per cent over the 12 months period upto January 1998 and exports have recorded a negative growth in dollar terms. The Revised Estimates for 1997-98 registered a major short-fall in tax collections and disinvestment receipts. Net tax revenues for the Centre estimated at Rs. 99,158 crore reflecting a drop of Rs. 14,236 crore or 12.6 per cent over the Budget Estimates. The short-fall was due to much lower customs revenue on account of both lower volume and unit price of imports. Receipts from PSUs disinvestments are estimated to fall short of the Budget Estimates of Rs. 4,800 crore by Rs.3,894 crore. The Revised Estimate for total expenditure is expected to exceed the Budget Estimates by Rs.3,069 crore. This has resulted in deterioration of fiscal deficit from the budget target of 4.5 per cent of GDP to 6.1 per cent.

    Underlining the need to bring down the fiscal deficit to reasonable level, the Finance Minister said that the Government proposes to review the content of the budgetary support for Annual Plan 1998-99 in the Regular Budget. It is the Government's resolve to review the Ninth Plan and revise the Budget Estimates, the Minister said. There is a immediate need to contain the growth of establishment expenditure and initiate process of PSU disinvestment to avoid shortfalls in receipts.

    The total expenditure in 1998-99 is estimated at Rs. 2,64,988 crore as against Rs. 2,35,245 crore in the current year. Out of this amount, the gross budgetary support to Central, State and Union Territory Plan is placed at Rs. 64,461 crore against Rs. 60,630 crore in the current year. Non-Plan expenditure in 1998-99 is estimated to be Rs. 2,00,527 crore against Rs. 1,74,615 crore in the current year, i.e. an increase of Rs. 25,912 crore. The reason for increase over RE 1997-98 is an account of an increase of Rs. 10,300 crore in interest payments, Rs. 4,747 crore in Pensions, Rs.3,900 crore in Defence expenditure and Rs. 1,500 crore in major subsidies.

    Shri Yashwant Sinha stressed the need to conduct economic policies with foresight and flexibility. He said, the regular budget to be presented in a few weeks time. The regular budget will seek to impart stimulus to agriculture and industry, restore dynamism to exports, encourage greater flow of foreign investment. Efforts to impove infrastructure strengthen the financial system, bring about strict fiscal discipline and build a strong transparent system of PSU disinvestments will be made, the Minister said. Concluding his Budget Speech, the Finance Minister said every effort will be made in the regular Budget to implement the economic goal set out in the National Agenda for Governance. Our aim is to make India an economically strong and vibrant nation which will participate in the world economy with confidence.
 
 

    The Union Finance Minister, Shri Yashwant Sinha has proposed to increase the amount being devolved to the states collected under the VDIS by an additional Rs.3,215 crore. Presenting the Interim Budget for 1998-99, in the Parliament today, Shri Sinha proposed to devolve to the states 77.5% of the Revised Estimates of VDIS collections for the full year 1997-98 instead of the earlier decision of devolving the same share collected upto the end of December 1997. The proposed increase will take the total devolution on this account to Rs.7,594 crore in the current financial year instead of Rs.4,379 crore announced earlier. The Finance Minister also proposed to provide an additional sum of Rs.1000 crore by way of Additional Central Assistance to States on account of externally aided projects in order to settle all pending claims in the current financial year. Shri Sinha said that these two decisions would give states an additional sum of Rs.8,594 crore in the current financial year. This, he said, was fully in accordance with the commitment in the National Agenda to extend greater assistance to the states.

    The Finance Minister also announced that a Constitution Amendment Bill would be brought forward to give effect to a recommendation by the 10th Finance Commission proposing an alternative scheme for sharing of resources between the Centre and states. Under this alternative scheme, 29% of the gross proceeds of almost all Central taxes is to be assigned to the States. Shri Sinha said that a consensus in this regard was arrived at in the Third Meeting of the Inter State Council held in July 1997 and has been endorsed by all the States.
 
 

    The Interim Budget for 1998-99 presented by the Union Finance Minister, Shri Yashwant Sinha resolves to implement the economic goals enunciated by the National Agenda for Governance. The thrust of the regular Budget would be to deepen, broaden and accelerate the economic reforms. The commitments listed by the Finance Minister include extending greater assistance to States, containing fiscal deficit at reasonable levels, building a strong and transparent system for PSU disinvestments and strengthening the financial system.

    The regular Budget to be presented in a few weeks time, will give a major boost to agriculture and industry, restore dynamism to exports and initiate immediate
 
 

    The Union Finance Minister, Shri Yashwant Sinha has said that economic reforms would be deepened, broadened and accelerated in the Regular Budget which would be presented shortly. Presenting the Interim Budget, for 1998-99 in the Lok Sabha today , he said the regular budget would seek to impart the necessary stimulus to agriculture and industry, restore dynamism to exports and encourage larger flows of foreign investment in line with the National Agenda for Governance.

    Shri Sinha said that the fiscal deficit for 1998-99 would be about 6 per cent of GDP which was clearly not acceptable and Government would make an endeavour to bring it down to a reasonable limit in the Regular Budget through appropriate measures. The Finance Minister said that he would make an effort in the Regular Budget to strengthen the financial system and accelerate the reform of the public sector while building a strong and transparent system for PSU disinvestments. He said that immediate action was called for to contain the growth in establishment expenditure and initiate the process of PSU disinvestment at an early date to avoid shortfalls in receipts experienced in the previous years. Shri Sinha asserted that in the Regular Budget a strict fiscal discipline would be brought about and it would also embody other new directions included in the National Agenda for Governance. Referring to the East Asian crisis, the Finance Minister said that it was the inherent strength of our economy, built over decades, which enabled the country not to succumb to the economic gales that have been sweeping through the Asian region. He cautioned that the external economic environment was fraught with unusual uncertainty and we must remain ever vigilant and watchful. To achieve rapid economic growth with low inflation and external stability despite the difficult international economic scenario, the country must conduct its economic policies with foresight and flexibility, he added.
 
 

    Performance in 1996-97.

- Loading of 409.02 million tonnes of revenue earning freight traffic achieved, representing incremental loading of 18.33 million tonnes with a growth of 4.7 %.
- Growth of 3.8% in passenger traffic.
- "Excess" of receipts over expenditure improved by Rs. 201 cr over Budget Estimate.
 
 

Revised Estimates 1997-98

- 387.35 million tonnes already loaded till February 98 against the target of 386.40 million tonnes.
- The target of 430 million tonnes for 1997-98 likely to be achieved.
- 5% growth recorded in passenger traffic.
 
 

Gross Traffic Receipts
 

- Gross Traffic Receipts likely to increase by Rs. 800 cr.

Working Expenses
 

- Higher pensionary provisions of Rs. 1,167 cr due to Fifth Pay Commission's recommendations.
- Total working expenses increased from Rs. 25,135 cr to Rs. 25,922 cr, an increase of Rs. 787 cr.
- The "Excess" of receipts over expenditure likely to go up by Rs. 96 cr over Budget Estimate 1997-98

Annual Plan 1997-98
 

- Despite higher Pay Commission's impact on pension liabilities, the level of internally generated resources maintained.
- Outlay on Annual Plan enhanced from Rs. 8,300 cr to Rs. 8,403 cr.
- Capital from General Exchequer increased by Rs. 170 cr and market borrowing by Rs. 370 cr.
- Private investment under BOLT less than expected. Budget Estimates 1998-99
- Additional freight loading of 20 million tonnes.
- Gross Traffic Receipts, at existing fare and freight rates, estimated at Rs. 31,022 cr. Higher by Rs. 2,367 cr over 1997-98.
- Passenger traffic estimated to grow by 5%.
- Ordinary Working Expenses estimated at Rs. 23,370 cr, an increase of Rs. 2,719 cr over 1997-98.
- Appropriation to Pension Fund enhanced to Rs. 4,000 cr, an increase of Rs. 633 cr over 1997-98.
-Total Ordinary Working Expenses at Rs. 28,870 cr.
- Net Railway Revenue at Rs. 2,511 cr.
- Dividend of Rs. 1,756 cr to be paid to General Revenues.
- Excess estimated at Rs. 755 cr.
- Outlay for Annual Plan
- Rs. 8,300 cr
 
 

Mr. Speaker, Sir,

    I rise to place before the House the Annual Financial Statement for the Indian Railways showing the estimated receipts and expenditure for the year 1998-99. The estimates are for the whole of the next financial year but as the time available now for discussion of the Demands for 1998-99 is very limited, I seek from the House, for the present, only a vote on account, sufficient to cover the estimated expenditure for the first four months of the financial year 1998-99, leaving the supplies for the rest of the year to be voted separately.

Review of Performance in 1996-97

2.     I shall now briefly go over the operating results of 1996-97, the last completed financial year. Railways achieved a loading of 409.02 million tonnes of revenue earning freight traffic, which was 18.33 million tonnes more than the loading in 1995-96, a growth of 4.7%. Passenger traffic recorded a growth of 3.8%. The "Excess" of receipts over expenditure improved by Rs. 201 cr over Budget. Actual Plan expenditure was Rs. 8,310 cr as compared to revised estimate of Rs. 8,300 cr and Budget estimate of Rs. 8,130 cr.

Revised Estimates 1997-98

3.     For the year 1997-98, a target of 430 million tonnes of revenue earning freight traffic was laid down. Having loaded 387.35 million tonnes till February, 98, which is higher than the expectation of 386.40 million tonnes up to that month, Railways are hopeful of meeting the full year's target. Passenger traffic has recorded a growth of over 5%.

Gross Traffic Receipts

4.     The trend of earnings has been encouraging and the expectation in the Revised Estimate is an increase of Rs. 1,000 cr. Gross Traffic Receipts are, however, revised upwards only by Rs. 800 cr since the outlook for realisation of old outstanding dues of the power sector is not quite encouraging.

Working Expenses

5.     As the House is aware, Government's decision on the V Central Pay Commission's recommendations have been implemented in 1997-98. Railways had kept a provision of Rs. 3,300 cr in the Ordinary Working Expenses for this purpose. This has been reduced to Rs. 2,694 cr in the Revised Estimate in view of payment of a part of the arrears on this account being deferred to the next year. Taking into account certain other post-budgetary factors, mainly the hike in the price of diesel as well as electricity tariffs, higher payment of Productivity Linked Bonus, lease charges and repairs to track affected by breaches, a net reduction of Rs. 284 cr is expected. Railways have, however, had to provide for a higher pensionary outgo of Rs. 1,167 cr, over and above Rs. 2,200 cr provided for Pension Fund in the Budget Estimate. On the other hand, the requirement for Depreciation Reserve Fund is lower by Rs. 96 cr. With this, the Total Working Expenses stand revised from Rs. 25,135 cr to Rs. 25,922 cr, an increase of Rs. 787 cr.

6.     As a result of these variations and a marginal change in the Net Miscellaneous Receipts, the Net Revenue is higher at Rs. 3,016 cr as compared to the Budget Estimate of Rs. 3,004 cr.7.A provision of Rs. 1,630 cr was made towards payment of dividend in Budget Estimate 97-98. This has now been scaled down to Rs. 1,546cr, resulting from certain adjustments relating to the years 1995-96 and 1996-97. 8. With these changes, the "Excess" of receipts over expenditure works out to Rs.1,470cr as against Rs.1,374cr anticipated in the Budget. This is being appropriated to the Capital Fund and Development Fund.

Annual Plan for 1997-98

9.    The Railways' developmental programme for 1997-98 envisaged a total outlay of Rs. 8,300 cr. The Revised Estimate of Rs. 8,403cr includes an increase of Rs. 170 cr of capital from General Exchequer and market borrowing of Rs. 370 cr, but there has been a shortfall in the private investment component.

Budget Estimates 1998-99

Gross Traffic Receipts

10.     I shall now deal with theBudget Estimates for 1998- 99.Gross Traffic Receipts for the year at the existing level of fares and freights are estimated at Rs. 31,022 cr, an increase of Rs. 2,367 cr over the Revised Estimate for the current year. The increase is based on an estimated 5% growth in passengers and a revenue earning freight traffic of 450 million tonnes, 20 million more than the 1997-98 target.

Ordinary Working Expenses

11.     The estimate of Ordinary Working Expenses has been placed at Rs. 23,370 cr, representing an increase of Rs. 2,719 cr over the Revised Estimate for the current year. This will cover normal increases and arrear payments deferred to 1998-99. 12. To meet the higher pensionary payments as a result of the V Pay Commission's recommendations, appropriation to the Pension Fund has been enhanced to Rs. 4,000 cr, which is higher than the Revised Estimate of 1997-98 by Rs. 633 cr. The contribution to Depreciation Reserve Fund is proposed to be kept at Rs. 1,500 cr. 13.The Total Working Expenses will amount to Rs. 28,870 cr, leaving Net Traffic Receipts of Rs. 2,152cr. A sum of Rs. 359 cr is estimated by way of Net Miscellaneous Receipts, and thus Net Revenue would amount to Rs. 2,511 cr.

Financial Results 1998-99

14.     Dividend to General Revenues for the year 1998-99 has been computed provisionally on the basis adopted for the year 1997-98. After payment of dividend of Rs.1,756cr to General Revenues, the "Excess" of receipts over expenditure works out to Rs. 755 cr.

Annual Plan 1998-99

15.     The Annual Plan for 1998-99 has been kept tentatively at Rs. 8,300 cr. It will be my endeavour to increase the Plan outlay so as to meet the investment needs better.16.     Sir, rail transport is far more efficient in energy use and far more friendly to the environment than road transport. Yet there has been a continuous decline in the share of Railways in land transport. This undesirable trend needs to be reversed. There is a new interest in reviving Railways all over the world. It will be my endeavour to take all the necessary steps to strengthen the Indian Railways to enhance their role in providing efficient transport of both freight and passengers. 17. Sir, I deem it an honour to work under the dynamic leadership of Hon'ble Prime Minister, Shri Atal Behari Vajpayee ji and it is my proud privilege to head the railway family. The House will no doubt appreciate the total dedication to duty displayed by railway employees at all levels. I am confident that the railways will continue to get the full support of the House and the railway users in achieving its goals.