As the Indian government is on an arrears recovery drive, the TaxIndiaOnLine team has found out a neat little pile of dues tucked away in an insignificant corner in the mountain of budget papers.

From 1948 onwards an amount of Rs 300 crore (Rs 3 billion) is shown as dues from Pakistan on account of share of pre-partition debt. The government apparently hopes to collect this 300 crore as the statement of liabilities of the central government given in the receipts budget, this amount of 300 crore is deducted from the total liabilities of the government.

On an average rate of 8 pre cent interest, this Rs 300 crore would be over Rs 20,000 crore (Rs 200 billion) by now. But even now in the 2004-05 Budget this is shown as only Rs 300 crore.

Rs 300 crore was a lot of money in 1948. In 1950-51, our external debt was only Rs 32 crore (Rs 320 million) and had we realised this Rs 300 crore then, there would have been no external debt.

In the 2004-05 Budget out external debt is shown as over Rs 55,000 crore. Even this would come down by half if we can realise the Rs 20,000 crore now.

However, practically, it has been our experience that we cannot realise most of our arrears be it from our good assessees, are not so good neighbours. The best way to liquidate arrears is to write them off.

Our budgets have been carrying this burden of three hundred crores for more than half a century. At least now let us, as a goodwill gesture to a neighbouring country, write off these arrears. Now the total public debt of the government is nearly Rs 20,00,000 crore (Rs 20,000 billion) and from this the government religiously deducts Rs 300 crore as dues from Pakistan, hopefully to be realised.

Source: Statement of liabilities of the central government as given in the Receipts Budget 2004-05 - page 30.

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