1. The Article of Ila Patnaik dated on 2-10-2002 has given cogent reasons for the debt-trap, which is included in the book.

2. Due to elections in the States, recommendations of Kelkar Committee to delete exemptions, rebate were not introduced in Budget of year2003. On the contrary more concessions were given under-section 88L and 88B of the Income Tax Act, and the Central Government has incurred a loss in revenue receipts.

3. In year 2004, the Government will not be able to take drastic steps due to election of Lok-Sabha in year-2004.

4. It is not certain whether any political party can get absolute majority of the party in Lok-Sabha elections. In absence of majority, and major change can not be introduced in year-2005, 2006 and 2007. Election can be held in December 2004 and so, no major steps can be taken in budget of 2005.

5. For the year 2002-2003 Rs.95,000 crore were borrowed for incurring Non-Plan expenses :- Interest Payment, Defence, Pay, Pension, Subsidies and Grants. The Plan expenses are from the borrowed funds.

6. Within next 4 years, no major changes are expected on D.A., Pension, Subsidies and so Interest-Payment figure, which is Rs.1,25,000 crore per year is likely to rise Rs.1,60,000 crore per year. Non-plan expenditure on defence, pay, pension, subsidy and D.A. will rise to unbearable limits which are now Rs.65,000 (Defence), Pay (Rs.33,000), Pension (24,000), Rs.49000 (Subsidy) crore.

7. Everything depends on how the Central Government makes an attempt to increase revenue receipts and reduce expenses.

8. For the Central Government- Tax G.D.P. ratio was 10.1 of G.D.P. (Gross) in year 1990-91, is now 9.9 in year 2001-2002.

9. The States Share is 2.8% of G.D.P. in year 2001-2002, so net Central Government tax G.D.P. ratio is only 7%, which is very low compared to the other countries. The chart showing Tax G.D.P. ratio of other countries printed in the charts.

10. Only Political-Will is required to solve economic problems and the Finance Minister can solve the problems provided steps are taken as suggested or similar steps, which can increase revenue receipts and decrease expenses.

11. Shri S. P. Ganguly in the book "Control Over Public Finance in India" has suggested some steps in Chapter of "Epilogue". The extract from para 26.3 to para 30 are reproduced herewith, which the Government can implement.

12. All M.P.'s should have knowledge of financial condition of India and should co-operate irrespective of party line and make a programme to save the country from entering in Debt-trap.

13. Above observations are supported by the News Item published in the Times of India dated on 01/07/2003 under the heading :-

S & P's India outlook negative,
Sovereign ratings affirmed; Public debt, fiscal deficit major concerns.

The New item is reproduced for the benefit of readers :-

Mumbai : Standard & Poor's said Monday it was affirmed its BB/B foreign currency and BB-plus/B local currency sovereign ratings on India, with a negative outlook.

The global ratings agency said the negative outlook reflects continuing difficulty for the country in addressing the fiscal problems and structural reforms.

"Rising public debt, projected at about 95 per cent of GDP this year, and growing fiscal inflexibility from running general government deficits of about 10 percent of GDP over the past few years, are the most pressing issues affecting the country's creditworthiness," said Takahira Ogawa, credit analyst at S & P.

"Compounding this is the inability of the political class, cutting across all parties, to regnite reform (particularly of the public sector) and to curb the borrowings of both state and Central government, which equal almost the entire financial savings of the country.

"Moreover, a growing share of public spending is diverted to meet interest payments and salaries for a bloated Civil service. As a result, public investment declining to only six percent of GDP from 10 percent over the past decade, " he said.

On the plus side, S&P said India has comfortable external liquidity, sustained by growing foreign exchange reserves and modest debt service payments.

Additionally, the economy has stable and good economic prospects driven by a booming private sector.

The agency said India is likely to achieve a 5.0-6.0 per cent trend gross domestic product (GDP) growth in the medium term, which could help cushion its high fiscal deficit and contain the heavy government debt burden.

"The negative outlook reflects the risk that the government's debt burden may continue to rise rapidly over the medium term, especially if GDP growth were to decelerate, " Said Ogawa.

Stronger political leadership on economic matters could restore policy momentum and confidence, putting GDP growth on a higher and more sustainable path, the statement said.

Aggressive tax reform and implementation of proposed legislation to control fiscal deficits could control the growth of public debt, S & P said.

Such measures, including full implementation of VAT, and better cost-recovery in public services, especially energy, could result in the outlook being revised back to stable.