Finance minister Arun Jaitley can heave a sigh of relief with an ₹80,000 crore benefit coming from unspent plan expenditure that could help him meet the stated fiscal deficit.
The FM is preparing to present his first full budget on 28 February. For the current fiscal, the deficit target is pegged at 4.1% of the GDP.
Since the new government took charge in May 2014 and the budget was presented only in July 2014, most plan expenditure got underway from September, a government official said.
For fiscal 2014/15, the total budgeted plan expenditure is pegged at ₹5.75 lakh crore, of which only about ₹3.526 lakh crore was utilised till December. The rules mandate that not more than 33% of the entire budget allocation be spent in the last quarter, and not more than 15% in the last month, i.e., March.
This ceiling is applicable to all ministry or department expenditure and also scheme-based expenditure. The motive is to prevent a last-minute splurge derailing overall expenditure management.
The evidence of ministries and departments not making use of allocated resources would allow the finance ministry to trim overall allocations substantially when the revised estimates are presented in the upcoming budget.
Roads and Civil Aviation
However, the two departments that have utilised allocated resources are the roads and aviation ministries. The ministry overseeing road transport and highways saw fund utilisation level reach 87% of the budgeted allocation of ₹28,881 crore. Civil aviation spent 80% of budgeted ₹6,720 crore.
The ministries of home affairs, agriculture, communications, health, human resource development, water and sanitation were unable to use the budgeted resources and are likely to see their allocation being trimmed.
The NDA government has refrained from slashing plan spending to keep the fiscal deficit in check, as has been the case over the final two years of the UPA government. The Modi-led government attempted to improve expenditure to help further growth prospects, but a proposed revamp to schemes run by funds controlled by the Centre delayed start, which acted as a damper to expected progress.
More than ₹1 lakh crore were curtailed in the last two years. The unspent amount of the current fiscal would mean a continued streak of three years of spending reduction cycle.
The government has had to contend with reduced tax revenue and slower growth, even as it pursues various options to help move the economic trajectory to a faster growth phase.
On Tuesday, Reserve Bank of India governor Raghuram Rajan affirmed that he expected the government to adhere to the planned fiscal deficit target for the year. With the deficit touching 100.2% of the targeted estimate, concerns are relatively less, as the government is expected to net funds from disinvestment of state-owned organisations and spectrum auction and a slight pickup in tax revenue. One of the larger benefits comes from the reduced subsidy bill, as a result of fall in oil prices by more than 50%.
FM Jaitley had reiterated time and again his commitment to the fiscal deficit target of 4.1% for the current year, read EconomicTimes.