Security surcharge will mop up resources, cut deficit: Sinha

Finance Minister Yashwant Sinha on Thursday said the five per cent national security surcharge would mop up resources and curtail rising fiscal deficit, but sought to delink it from industrial demand.

"I have to find the money somewhere given the difficult fiscal situation. I can't produce it (money) out of the blue. We must remember the difficult situation on the borders," Sinha said when asked whether this surcharge would further hit the already slowed manufacturing sector and adversely affect demand.

He said, the defence allocation had been increased by Rs 30 billion and Plan Allocation had also been hiked by 20 per cent, adding, the incremental component of surcharge was only three per cent since two per cent Gujarat surcharge stood abolished.

"Tax is not the only component to demand. Only 25 million people pay taxes. Also, the incremental increase is only three per cent," he said while delinking demand from the proposed surcharge.

Justifying the Budget proposals, Sinha said one must perceive these in perspective.

Sinha identified overall consolidation of economic reforms, partnership with states towards fiscal reforms and continuation of privatisation drive as key features of the Budget.

Asked about the poor reaction of the markets to the Budget, with the BSE Sensex falling by as much as 107 points immediately after the Budget announcements, Sinha shrugged it off saying "markets have their own reasons to react".

The finance minister defended the defence surcharge stating that he had not hit at the bottomline (net profits) of companies adding last year's removal of surcharge had not really resulted in significant revenue accruals.

He said the revenue projections were as realistic as possible and he hoped to maintain the fiscal deficit at the targeted 5.3 per cent for next fiscal.

PTI

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