It has budgeted for Rs 3,09,801 crore as capital expenditure during the current financial year, which will rise to Rs 3,41,000 crore in the next one, and to Rs 3,90,000 crore in 2019-20, it said.
Defence, which accounts for about 30 per cent of the government's capital outlay, will see the spending rise from Rs 91,580 crore in the current financial to Rs 1,01,137 crore in the next one and Rs 1,11,706 crore in 2019-20.
Together with revenue expenditure, government's total spending is projected to rise from Rs 21.46 lakh crore in 2017-18 to Rs 23.4 lakh crore in the next financial year and Rs 25.95 lakh crore in 2019-20.
While outgo on fertiliser subsidy is projected to be flat at Rs 70,000 crore between the current financial and 2019-20, the food subsidy bill will rise to Rs 1.75 lakh crore in 2018-19 and Rs 2 lakh crore in the following financial year. Food subsidy bill in current financial year is pegged at Rs 1.45 lakh crore.
Petroleum subsidy would drop to Rs 18,000 crore in 2018-19 from Rs 25,000 crore in the current financial year and to Rs 10,000 crore in 2019-20.
Petrol and diesel prices have been decontrolled and subsidy outgo on petrol is restricted to LPG and kerosene.
"In continuation of the efforts of the government to rationalise subsidies, the Government has decided to increase the cost of LPG cylinders by Rs 4 per month. The ultimate aim of the Government is to eliminate the subsidy on LPG cylinders by end March 2018," the review said.
After successful implementation of paying subsidies directly into bank accounts of LPG users, the government is now focused on reducing kerosene subsidies.
The introduction of the Goods and Services Tax (GST) from July 1 this year as also the increased surveillance post demonetisation would expand the tax base from in next two financial years, the review said.
While the revenue deficit target of 2% of GDP will be met in the current financial year, the deficit would be 1.9% in the next. "However the elimination of effective revenue deficit will have to be re-calibrated," it said.
The review projected aggregate revenue expenditure in Defence, excluding pensions, to grow by about 10.4% in 2018-19 and 8.5% in 2019-20. "This pushes the defence revenue expenditure to Rs 201,511 crore and Rs 218,629 crore in 2018-19 and 2019-20 respectively," it said.
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