SPEECH
OF SHRI H M PATEL
MINISTER OF FINANCE
INTRODUCING THE BUDGET FOR THE YEAR 1977-78 (INTERIM)
Dated : March 28, 1977
I rise to present the Budget to this august House. The Budget and the demands
for grants that are being made available to Honourable Members were prepared
on the basis of the directions given by the previous Government. I would like
to make it clear at the outset that though these have been circulated, they
do not reflect our philosophy, policies, and programmes.
2. There was no time since we assumed office to recast these estimates and
to print the Budget documents afresh. The annual financial statement and the
demands for grants prepared earlier will serve the limited purpose of fulfilling
the Constitutional requirements for taking a Vote on Account before the 31st
March, 1977. This will enable Government to meet essential expenditure during
the first four months of the
ensuing financial year.
3. The Budget for the current financial year presented in March, 1976 envisaged
an overall deficit of Rs.328 crores. Due to certain increases in expenditure,
partly offset by improvement in receipts, the year is expected to close with
a deficit of Rs.425 crores. It is not necessary for me to take you over the
various details of the budgetary developments during the current year for
which the present Government can obviously assume no responsibility.
4. According to the Budget as prepared, while total receipts are expected
to go up during the year 1977-78 to Rs.14,910 crores as compared with the
figure of Rs.13,759 crores in the Revised Estimates for 1976-77, expenditure
for the ensuing year is estimated at Rs.15,542 crores as against the current
year’s Revised Estimate of Rs.14,184 crores. This position has resulted
from an increase in both non-Plan and
Plan expenditure.
5. The Central Sector of the Plan for 1977-78 involves an outlay of Rs.5.053
crores and will make a draft on the Central Budget of Rs.4,096 crores. This
compares with the preceding year’s (1976-77) outlay of Rs.4,090 crores
and a budgetary support of Rs.3,347 crores at the Budget stage. Central assistance
to States and Union Territories, and for various programmes concerning the
Hill and Tribal areas, the North Eastern Council and Rural Electrification
Corporation as well as the Andhra Six Point Formula amounts to Rs.1,692 crores
according to these estimates for the year 1977-78. The corresponding figure
for the current year is Rs.1,412 crores.
Taking Centre, States and Union Territories together, the Budget envisages
a total Plan outlay for 1977-78 of Rs.9,953 crores as compared with Rs.7,852
crores in the Budget Estimates of 1976-77.
6. The net effect of the proposals made in the Budget would be an overall
deficit of Rs.1,432 crores. However, the Budget takes credit for special borrowings
of the order of Rs.800 crores against drawal of foreign exchange reserves,
the assumption being that such borrowing would be non-inflationary as it is
covered by increased imports of goods. Accordingly, the Budget document shows
a net deficit of Rs.632 crores.
7. In the context of the rise in the wholesale price index of 12.5 per cent
that has occurred since March, 1976, any deficit financing has to be viewed
with concern. In order to reverse the rising trend of prices, and to usher
in a period of reasonable price stability, the Government are of the firm
view that financing of public expenditure in a manner which would generate
inflationary pressures should be eschewed. It is our firm resolve to review
the fifth Plan and to revise the Budget Estimates so that they reflect our
thinking and priorities. We propose to complete this exercise in time for
the regular Budget which will be presented in May, 1977.
8. Meanwhile, I have asked my Ministry to request all Ministries, Departments
and Public Sector Undertakings under the control of the Central Government
not to take up new schemes and not to enter into fresh major commitments till
we have completed our review. The possibility of rephasing and re-scheduling
continuing schemes would also be explored. All Ministries and Departments
of Government, and Public Sector Agencies will be asked to observe the utmost
economy in expenditure, keeping in view the present Government’s emphasis
on austerity, and avoidance of all forms of ostentation.
9. It is the will of the people of India as expressed unequivocally at the
Polls, that there is an urgent need to redirect our economic policies and
priorities so as to ensure that economic growth subserves the objective of
speedy eradication of poverty and unemployment, and a progressive reduction
in inequalities of income and wealth. The House may rest assured that we shall
keep our faith with the people. The task ahead is formidable, but with the
willing support and goodwill of the people, we are confident that we shall
achieve our objective.