Chidambaram rules out additional borrowing

Finance Minister P. Chidambaram, on Friday, ruled out any additional borrowing by the government in the remaining part of this fiscal stating that the government would be able to accommodate the enhanced outgo within the present limit.

“With Rs.28,500 crore of petroleum subsidy, about Rs.2,000 crore for infusion of equity in Air India and Rs.300-odd crore for some small items, this amount, we think, we can accommodate within the present borrowing limit. We don’t think at this moment we need to borrow anything more than what is indicated,” he told reporters here.

The government had budgeted market borrowing at Rs.5.7 lakh-crore during the current fiscal to bridge the expenditure-revenue gap. The Finance Minister had earlier said that the fiscal deficit might go up to 5.3 per cent of gross domestic product (GDP) as against the budget estimate of 5.1 per cent for the current financial year. In the first-half (April-September) of 2012-13, fiscal deficit rose to Rs.3.37 lakh-crore which was 65.6 per cent of the budget estimate.

The front-loading of borrowing was done as part of its strategy to make available capital to private sector in the last six months of 2012-13. The government has proposed to raise Rs.2 lakh-crore in the second-half of the fiscal.

Earlier, Mr. Chidambaram informed the Lok Sabha during Question Hour that several insurance firms and companies were being probed for suspected evasion of service tax and recoveries had been made in some cases. He also provided a list of such insurance companies and firms which were suspected to have evaded service tax or found after investigations to have engaged in financial wrongdoings. “In cases where investigation has been completed, show cause notices have been issued. Some cases have been adjudicated and demands of service tax confirmed. Appeals against some orders are pending before the Customs, Excise and Service Tax Appellate Tribunal,” the Finance Minister said.

Seven insurance companies were found evading service tax in 2009-10, nine in 2010-11 and ten in 2011-12. In 2012-13 (up to October) eight companies have been found guilty of service tax evasion. Some of the companies include Bharat Reinsurance Company, IFFCO Tokio General Insurance Services Limited, Apollo DKV Insurance Company Limited, DLF Premierico Life Insurance Company, Aviva Life Insurance Company India Limited, Sri Ram Life Insurance, Sahara India Life Insurance Corporation and Reliance Life Insurance Company Limited, he said in a written reply.