New Delhi, March 22

Suggestions by Dr. Raja Chelliah former member of the Planning Commission. to use proceeds from the disinterment in public enterprises to "retire public debt" to reduce the interest burden of the Government has found support from economists.

Most of the economists, who respond to PTI questionnaire on the Budget proposals, are of the view that while the effort of the Finance Minister, Dr Manmohan Singh, to reduce market borrowing by Rs. 25,500 crore in 1992-93 was commendable, this was not enough to bring down interest payments substantially in the years to come.

Interest payment in 1992-93 Budget estimates have escalated to Rs 32,000 crore forming 45 per cent of total revenue expenditure compared to Rs 27,250 crore in the revised estimates for the current year of 41 per cent of revenue expenditure for the year.

Revenue deficit had, therefore, to be kept at the same level in the Budget for 1992-93 as in

the Budget estimates of the previous year Rs. 13.882 crore against Rs 13.854 crore.

Dr. Chelliah has said that it the fiscal deficit was cut to five per cent of GDP, while revenue deficit continued to be around 2.5 percent, it would lead to a drastic setback to capital formation by the Government sector. He has. therefore suggested unorthodox ways of reducing revenue deficit.

Commending Dr. Chelliah's suggestion, Dr. Charan D. Wadhava of the Centre for policy Research, says " large increases in interest payments are making Finance Minister's task of reducing revenue deficit much more difficult every year".

While agreeing with D.R. Chelliah's suggestion to use part of disinterment proceeds for retiring higher cost debt, the says "simultaneously, there is an urgent need for partially restructed PSUs to generate more internal revenue to reply their existing higher cost debts as well as increase the diffident payments to the Union Government".

Dr. J. D. Agarwal of the Indian Institute of Finance, however, disagrees with Dr. Chelliah describing his suggestion as "ill-founded".