ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Government s Finances-Mounting Deficit

Government's Finances MINISTERS in this country are able to give solemn assurances in Parliament and then quietly forget about them. One such assurance relates to the amount of deficit financing by the Centre in 1974-75. Faced with an apparently uncontrollable inflationary situation, the Union Finance Minister had repeatedly assured the country that the level of deficit financing in the current fiscal year would not exceed the budgeted figure of Rs 126 crores. In the supplementary budget there was a tacit admission that the deficit might go up to Rs 325 crores, despite a massive tax effort of Rs 723 crores and a cutback of Rs 200 crores in Plan and non-Plan expenditure. In early October a Finance Ministry spokesman had discounted reports that the Centre's deficit had risen to Rs 656 crores as on September 13 by referring to the level of net reserve Bank credit to the government which was said to be lower. It was also argued on behalf of the government that the Centre's budgetary position would improve from mid-October onward with the normal flow of funds from the states on account of repayment of Central loans and payment of interest.

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