1. Interest payment liability which was Rs.21471 crore in year 1990-91 has increased to Rs.1,25,000 core estimated for year 2003-04. The liability increases at the rate of Rs.9,000 crore per year. The fiscal deficit is estimated at Rs.1,53,000 for current year. Out of revenue receipts, about 50% of revenue receipts are paid towards interest payments liability. Out of remaining 50% the Government has to pay for Defence, Pay, Pension, Subsidies and Grants. Above non-plan expenditure exceed the revenue receipts, and the Central Government had to borrow Rs.95,377 crore (2002-03) in order to meet non-plan expenditure. If drastic steps are not taken entire revenue receipts will be utilized in spending interest payment liability. The suggestions are made to reduce interest payment liability.

2. The Fiscal Responsibility, Budget Management Bill is passed in Lok-Sabha. The Finance Minister should lay down the target of reducing deficit in the Budget and also interest payment liability and should formulate tax proposals accordingly.

3. The entire plan expenditure is from borrowed funds. Let there be a plan-holiday for one year, Shri Morarji Desai had exempted a plan holiday. The projects on Roads, Electricity and Water can be exempted from plan holiday. The borrowing for the plan expenditure for the said year is not required and interest payment liability can be stabilized.

4. Interest rate on Government Schemes should be maintained at 8% taxable, which is quite reasonable as every tax-payer will have to pay tax from 10% to 30% on interest income as it is suggested that section 80L should be deleted and every interest income should be made taxable.

5. On Postal Schemes, taxable 8% interest should be given. Provision should be made for old subscribers and new subscribers to provide P. A. No. and assessment ward within six months, the entire income can be brought within tax net.

6. The Central Government should discontinue 10% Bonus given to the depositor in monthly scheme on expiry of six years.

7. The Government should discontinue cumulative Schemes as interest income is not disclosed by the depositor. The Government should insist for P.A.No. and deduct 5% of tax on interest accrued after five years to eight years.

8. There are about 225 million accounts, there may be 150 million Savings Accounts. The interest is given twice a year. 5% of interest amount should be deducted towards income tax.

9. The Central Government claims to introduce computer in Income-tax. In U.S.A., every interest dividend income of the depositor is notified to Social Security Department and it is conveyed to Income-Tax Department and so, U.S.A. recovers 92% of tax from total taxable income. The Government should introduce such system so that entire interest income is notified.

10. The Reserve Bank should discontinue tax-free bonds and only issue taxable bonds of 8% interest. The Government should insist for P.A.No. of Depositor and Ward of Assessment and investment should be notified to income tax Department. If it is done, tax at source should not be deducted.

11. In General Provident Fund and Employees Provident Fund, there is no limit of Investment at present. At present 10% of pay is deducted in Provident Fund Account of an employee. It should be reduced to 5% of pay. The liability of the Government to pay interest can be reduced and tax on 5% income can come in tax net.

12. The Central Government had appointed a Committee which had recommended to discontinue opening of new P.P.F. accounts and not to take fresh deposits in existing P.P.F. accounts. The question of rebate u/s.88 of I. T. Act can not arise, if above suggestions are accepted.

The Interest Payment Liability of the Central Government was Rs.21,000 crore in year 1990-91 which has increased to Rs.1,25,000 crore and debt has increased from 3 lac crore to about Rs.17 lac crore within 13 years. Out of total net revenue of the Central Government 50% are spent towards payment of Interest Liability and about Rs.95,000/- crore are borrowed to meet Non-Plan expenditure namely :- Interest Payment Liability, Defence, Pay, Pension, Subsidy and Grants. And the Plan expenditure is entirely from the borrowed funds.

About Rs.11,000 crore are deposited in P.P.F. accounts every year. On consideration of the above fiscal condition of the Nation. It is absolutely necessary to close P.P.F. Scheme, and existing account-holders can be given following facilities :-

• Tax-free interest at 8% or less can be given on existing deposits.

• Existing Depositors are given more facilities to withdraw the amounts.

• Depositors were allowed only loans from P.P.F. accounts within first five years. The depositors should be allowed as loan upto 25% of the deposits existing on 31st March and 2% service charge can be charged on the loans. If loans are allowed, the liability of the Central Government to pay interest will reduce and income can be raised from 2% of service charge.