Media Type

Lecture

Publication Date

6-23-2001

Description

The previous speakers have done an excellent job in reviewing the key features of the budgetary proposals from micro perspective. I would therefore like to shift the focus to the strategic and macro picture. Every budget has to be viewed in a certain strategic context. This second budget of the present government forms part of a medium term program of economic revival whose ultimate objective is to reduce the debt burden, get out of dependence on the International Monetary Fund and set the course of the economy on a path of self reliance. This is the first budget after a very long time where the current revenues would be able to finance current expenditure. In other words we will borrow this year only for development expenditure. If these expenditures are utilized for productive purposes and add to the infrastructure capacity or human resource development then the growth rates will be positive and the country will be able to repay these loans without much difficulty. For the past two years we have also been generating primary surplus i.e. budgetary deficit minus interest payments has been about 2% of GDP. This trend will continue in the coming fiscal year also and thus lead towards a reduction in debt-GDP and debt-revenue ratios which are quite high. This is the path which will ultimately lead to reduction in debt burden.

Notes

Speech At The Post-Budget Seminar organised by The Institute Of Chartered And Management Accountants on June 23, 2001

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