Even as problems on the external front look slipping out of its control, the government might keep its expenditure under check to limit its fiscal deficit at the budgeted 4.8 per cent of gross domestic product in the current financial year.
It’s learnt the government has decided to continue with the austerity measures it had announced last year. The finance ministry might issue instructions for a 10 per cent cut in non-Plan expenditure and a ban on creation of new government posts this year, too.
According to officials, unlike last year, the scope for a cut in Plan expenditure is limited because the allocation under this head had been increased by only 11.7 per cent over last year’s Budget Estimates. Moreover, the government doesn’t want to choke growth with a steep cut in Plan expenditure.
“There will be some cut in Plan, but there is not much scope for adjustment. Compression in non-Plan expenditure is rarely possible. All we can do is not fill some of the existing vacancies and cut administrative costs,” said a finance ministry official, asking not to be named.
Because of the rupee’s recent depreciation against the dollar, the finance ministry is expecting a higher-than-projected outgo under fuel subsidy, as well as fertiliser subsidy. The additional outgo will have to be met from savings under other heads. The first batch of supplementary demands will not have anything for these sectors, but the second one, to be tabled in the winter session of Parliament, might provide for any additional requirements after monitoring how “crude oil prices and the rupee shape up”.
On the revenue side, the ministry is worried that meeting the disinvestment target of Rs 40,000 crore might be difficult, if the market situation did not improve. So far, receipts from disinvestment have been just Rs 1,325 crore. Tax collections, too, face a risk of shortfall, as GDP may grow at only 5-5.5 per cent, compared with the government’s projection of 6.1-6.7 per cent.
