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This drastic step of going in for a mid-term review has been prompted by the increase in Government expenditure particularly because of the pay hike for Central staff as a result of which the budget deficit could not be restricted to the targeted level.

The other measures to mop up more revenue announced tonight include a 10 per cent increase in countervailing duty on zero duty export items covered under the Export Promotion Credit Guarantee Scheme (EPCG) which is expected to net Rs 300 crore. The government has also decided to raise an additional Rs 2 200 crore from an increased disinvestment in public sector units.

Announcing the Cabinet decision at a Press conference here tonight the official spokesman of the government said that the special customs duty of 3 per cent was expected to provide a revenue of Rs 1000 crore. Apart from petroleum products, the prices of which were hiked recently project imports have also been spared from this additional customs duty.

The foreign travel tax which was Rs 150 for neighbouring countries and Rs 300 for the other countries will now be doubled to Rs 300 and Rs 600 respectively. This increase in the foreign travel tax is expected to yield Rs 180 crore to the Government.

The official spokesman said that the Cabinet decision would come into force as soon as the President promulgated an ordinance to this effect. The recommendation of the Cabinet has already been forwarded to the President.

According to the official spokesman although both plan and non-plan outlay in the budget would be reduced by 5 per cent, priority sectors like defence would be excluded from this expenditure cut While the reduction in plan expenditure will be to the tune of Rs 1800 crore non-plan outlay will go down by Rs 1400 crore.

He said that the Government had also decided to defer until the next financial year any proposals for new expenditure. While in the main budget it had been proposed to raise Rs 4,800 crore through disinvestment of public sector units this target has been raised to Rs 70000 crore after the interim review.

He said that "these measures were in the nature of an advance correction in order to keep the fiscal deficit in check." The spokesman said that the post-budget commitments of the Government had gone up by Rs 12 400 crore. He pointed out that although the Government had allocated Rs 11,250 crore for meeting the impact of the Fifth Pay Commission award the burden had turned out to be far in excess of this amount. The payment of arrears alone for 1996-97 until March next year amount to Rs 6,750 crore, he claimed.

The Government will be advising the Railways Posts and Telecom departments to absorb as far as possible the additional expenditure within the allocated budget. These three departments account for the maximum number of government employees.

The Cabinet also approved today the appointment of global financial advisers for disinvestment in five public sector units including Modern Food Bharat Aluminium Co (BALCO) Kudremakh Iron Ore Company ITDC and the Bongaigaon Refineries and petrochemicals Ltd. A disinvestment ranging from 30 to 50 per cent is expected to be made in these units on the basis of professional advice to be given by the global financial advisers.