The Hindu : 'Drought cess' ruled out for now

Online edition of India's National Newspaper
Sunday, Nov 17, 2002

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'Drought cess' ruled out for now

By Alok Mukherjee

NEW DELHI NOV. 16. Despite the increased expenditure due to drought in many parts of the country, the Government is not considering any `drought cess' as of now. As per the recommendations of the Eleventh Finance Commission, the Centre is empowered to levy a special surcharge on Central taxes for a limited period to finance any assistance to States facing national calamities and such a levy was imposed in 2000-01.

Top officials of the Finance Ministry told The Hindu here that the current liquidity position of the Government was ``good'' and recently scheduled borrowings of about Rs. 5,000 crores have been deferred.

"The idea as of now is to contain expenditure and push for revenue growth. But the real picture will emerge by the end of December when we will know whether the increased drought expenditure can be managed with expected revenues or additional resource mobilisation measures (like surcharge) have to be introduced,'' the officials said.

The December-end deadline for reassessment has been set because revenue trends in the first three quarters of the current fiscal would be clear by the advance tax payment date of December 15. Moreover, some planned expenditure had been deferred in the initial period of the current fiscal year due to drought-like conditions and the Finance Ministry expects this expenditure to pick up towards the end of the third quarter. Thus, a clear picture about the revenue position of the Government would be available by then. In its plan to meet the drought expenditure, the Government has also factored in some of the allocations already made. For instance, substantial funds are available under the Prime Minister's `Sampooran Gram Rozgar Yojana', which could be utilised for drought-relief activities.

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