New Delhi, Feb. 3: The fiscal deficit and the debt burden of the Union government remain the two key areas of concern.

Although finance minister Jaswant Singh has projected a lowering of the fiscal deficit to 4.8 per cent of the GDP from the budget estimate of 5.6 per cent, there are still question marks on how this has been achieved. In 2004-05, the government is projecting that the fiscal deficit will go down further to 4.4 per cent of the GDP — again the number looks more than suspect.

Lower spending by Rs 11,000 crore coupled with a projected income of another Rs 11,500 crore from sale of stocks in two oil PSUs in the market helped Singh bridge the deficit.

Another factor that helped was that the BJP-led government and Singh had both expected GDP growth to be at about 6 per cent when they made last year’s budget and all calculations were based on that.

Unexpectedly, the decade’s best monsoon showers, which brought a bumper harvest in its wake, has seen the economy grow by 8.4 per cent in the second quarter, which Singh now forecasts will translate into an overall GDP growth of 7.5-8 per cent. With the base becoming higher, fiscal deficit as a percentage of the GDP become lower.

At the same time, the debt burden of the country continues to be an area of concern with as much as 24 per cent of the interim budget presented today expected to be frittered away in paying interest charges on loans raised by the government.

The outstanding debt of the government is expected to shoot up to Rs 19,23,509.92 crore during 2004-05 which represents an 11.6 per cent jump over the corresponding figure of Rs 17,24,198.82 crore for 2002-03.

The foreign component of the debt burden is expected to leap by 16.2 per cent to touch the Rs 55,083.93 crore-mark during the coming year from 47,407.41 crore in the current fiscal.

The outgo on interest is twice the expenditure incurred on defence which is 12 per cent of the budgetary outlay and way above the 15 per cent allocated for development work under the central plan outlay.

A whopping 44.5 per cent of the total revenue receipts of the government will go towards the repayment of loans and interest during the year.

Although the $100 billion in foreign exchange may be a reflection of the strong fundamentals of the economy, the heavy burden of debt servicing represents a fundamental weakness.

The internal debt of the government comprises loans raised in the open market, special securities issued to the RBI and other bonds. Borrowings through treasury bills issued to state governments, commercial banks and rupee securities issued to international financial institutions such as the IMF, World Bank, International Development Association (IDA) and the Asian Development Bank.

The government is also liable to repay the outstandings against the various small savings schemes, provident funds, securities issued to IDBI, UTI and nationalised banks.

During 2004-05, the outstanding foreign loans that the government has taken will amount to Rs 14,969 crore. While Rs 9,422.5 crore of this is in the form of multilateral loans from financial institutions such as the World Bank, ADB and IDA, the remaining Rs 5,523 crore has been picked up as bilateral loans from individual countries.

Japan heads the list with outstanding loans to the tune of Rs 3,761 crore, followed by Russia with Rs 1,654 crore. Germany is placed at the third spot with Rs 67 crore and France is ranked next with Rs 1 crore.