Massaging figures only delays the truth.

In an effort to hide the desperate state of government finances our most revered Finance Minister is resorting to various subterfuges. The first is to ask all government departments to hand over all the money they have not spent as yet. Apparently this could amount to as much as Rs 650-700 billion which is 5% of budgeted spending. A request for Rs 300 billion to pay for fertiliser subsidy by the Minster for Agriculture has been rejected. Since this must be paid for at some time means that this year's deficit is being transferred to next year. The second is to force companies to pay service tax if they have not obtained a stay order from a court, Commissioner ( Appeals ) or Customs, Excise and Service Tax Tribunal within 30 days. TOI, 9 January. It is true that Indian companies often get themselves a stay order only to postpone payment of taxes to a later date knowing that cases take years to resolve. The problem is that the appellate authorities are so busy that they may take much longer to hear the appeal. The law states that the authority can grant a stay within 6 months of appeal which means that if a stay is granted the government will have to return all the money collected. However, it is not easy to get a refund from government departments so companies will have to spend unnecessary time on getting the money and no doubt officers in the departments will do very nicely with fat bribes, thank you. Again this is another means of showing increased tax revenue this fiscal so long as the refund can be postponed to April and beyond which will be the next financial year. Postponing deficit till next year would have been fine if there was a good prospect of raising more money next year but that is increasingly in doubt. The Index of Industrial Production was down by 0.1% in November which will reduce corporate tax collection and exports fell by 1.92% in December widening the trade deficit to $24.8 billion that month which will worsen the Current Account Deficit. Capital goods sector contracted by 7.7% in November showing contraction in the industrial sector. Mr AM Naik, Chairman of Larsen and Toubro said that this will only get worse because of imports from China. Apparently China subsidises exports by 25-30% which makes their goods cheaper. He said that 80% of thermal power plants are imported from China and every other manufacturing sector is going to suffer. He advocated a safeguard duty of 25-30% on Chinese goods. Mr Naik said that we have imported $250 billion worth of goods from China in the last several years costing us 10-15 million jobs. ET, 11 January. The biggest problem is that the looming disaster was created by the present Finance Minister in 2008. He is now desperately trying to hide the mess by massaging figures. But how long can he hide the truth.