The debt restructuring worth over Rs 120,000 crore (Rs 1200 billion) and the cash management scheme for various ministries proposed in the Budget would have a positive impact on the fiscal deficit pegged at 5.6 per cent for 2003-04, Finance Minister Jaswant Singh said on Monday.

A bill to bring in constitutional amendments would be introduced to enable states to share with Centre a portion of revenue from Service Tax, Singh said at CII's post-budget meeting in New Delhi.

He sought to allay fears of the industry that the services sector would be taxed heavily, saying he would ask states to keep the tax rates low to enable faster growth in the sector that constitutes over 48 per cent of country's gross domestic product.

To further power reforms, Singh said the Electricity bill would also be introduced in Parliament shortly.

Admitting that the high fiscal deficit was a matter of concern, Singh said "what worries me is the revenue deficit."

Although the government has curtailed expenditure to the tune of Rs 6,000 crore (Rs 60 billion) and introduced "cash management" system in major spending ministries, he said the government cannot continue to spend more than what it earns.

The buyback of high-cost securities worth Rs 40,000 crore (Rs 400 billion) from banks would address the burgeoning non-performing assets in the banking sector, while the debt restructuring scheme would enable states to save up to Rs 83,000 crore (Rs 830 billion), he said, adding "the Rs 1,20,000 crore (Rs 1200 billion) debt reduction is bound to have a positive impact on debt recovery and fiscal management."

To improve revenue, he said, "I am endeavouring to move from a coercive system to a green-channel based tax system based on the trust of the citizens."

PTI