Finance

Ministries told to continue spending allocated budgets

The finance ministry has asked ministries and departments to continue spending their allocated budgets as it got down to preparing the interim budget for FY20, signalling its comfort with government finances even as the fiscal deficit crossed the full-year estimate in October.

The government has budgeted the fiscal deficit this financial year at 3.3% of GDP, which independent experts said might be breached, an assessment the government does not seem to share.

“Ministries have been asked to spend whatever has been allocated… There is no directive that they need to put expenditure on hold,” a government official privy to the deliberations told ET.

The budgeted fiscal deficit for FY19 is pegged at Rs 6.24 lakh crore, or 3.3% of GDP. The gap in the first seven months came in at Rs 6.49 lakh crore, or 103.9% of the estimate.

At the same time last year, the fiscal deficit was 96.1% of the estimate and the government eventually breached its target of 3.2% of GDP to end FY18 at 3.5% of GDP.

“Concerns persist that a shortfall may arise in FY2019 relative to the budgeted level, in indirect tax revenues driven by CGST and excise collections, non-tax revenues led by dividends and other communication services, and disinvestment proceeds,” said Aditi Nayar, principal economist at ICRA. “In such a scenario, a fiscal slippage may arise unless a portion of the subsidies due for the current year is rolled over to the next fiscal or capital expenditure is curtailed in some sectors.” India Ratings has pencilled in a fiscal deficit of 3.5% of GDP.

SPENDING ON COURSE

The spending pattern so far suggests government comfort. Capital spending, which is the first to be axed under fiscal pressure, was 59% of the full-year estimate at the end of October, ahead of 52.9% a year earlier.

The government could rejig allocations of ministries in the revised estimates as some of their spending continues to be slow. The ministry of water resources, river development and Ganga rejuvenation has spent 41% of its budget of Rs 9,000 crore so far.

Essentially, the unspent funds of some ministries could help tide over the fiscal stress arising largely from the revenue side and not due to overspending. The total receipts at the end of October were 44.4% of the full-year estimate against 48% at the same point a year earlier.

The government is banking on higher direct tax collections as there could well be a shortfall in overall indirect tax collections due to the goods and services tax.

Ministries such as rural development have sought additional funds for key programmes including the Mahatma Gandhi National Rural Employment Guarantee Scheme.

“Only in those cases where the ministry’s implementation of the programme is such that there is virtually no likelihood of the entire allocated funds being utilised, then in RE (revised estimates) allocations are proposed to be reduced. But there is no such situation that we have to reduce allocations because we don’t have enough revenue streams. There is no forced reduction at all,” economic affairs secretary Subhash Garg had told ET earlier in an interview.





Source link

Tags
Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Adblock Detected

Please consider supporting us by disabling your ad blocker