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| Debt servicing, Pay Commission inflate expenditure by 13.3% |
| BS Reporter / Jul 07, 2009, 04:29 IST |
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Non-plan expenditure to increase by 12.5 per cent
For the first time, the government expects its total expenditure to cross Rs 10 lakh crore and touch Rs 10,20,838 crore this financial year — an increase of 13.3 per cent over the revised estimates of 2008-09.
At this level, the Centre’s spending would account for nearly 18 per cent of India’s output. However, capital expenditure, which creates assets that will yield future benefits or revenues, increased sharply by 27 per cent to touch Rs 1,23,606 crore in 2008-09.
The increase in the total expenditure was mainly on account of higher interest payment on government debt and due to the implementation of the Sixth Pay Commission’s recommendations. The estimate does not include oil subsidies, which continue to be kept outside the Budget. This financial year, the Centre expects to issue Rs 10,306 crore worth of bonds to oil marketing companies.
Total debt servicing, which includes both repayment of debt and interest payments, is projected at Rs 3,42,891 crore in 2009-10, compared with Rs 3,37,316 crore in the last financial year. This represents 36.7 per cent of revenue receipts, which means that the government is spending nearly Rs 37 for every Rs 100 earned in tax and non-tax revenue.
With the fiscal deficit hitting a 16-year high of 6.8 per cent of the gross domestic product, or GDP, the government’s total debt is projected to increase by Rs 3,59,377 crore in 2009-10, an increase of 11.5 per cent over the revised estimates of 2008-09.
Non-plan expenditure, which accounts for 68 per cent of the total spending, is projected to increase by 12.57 per cent in 2009-10. Interest payments and debt servicing, defence expenditure and non-plan grants to states account for 90 per cent of all non-plan expenditure.
Non-plan defence spending will increase by Rs 27,103 crore, mainly on account of implementing the pay commission’s award and due to the “enhanced requirement for modernisation of defence forces.”
A provision of Rs 6,704 crore has been made for investment in international financial institutions. Details have not been given.
On the plan side, gross budgetary support for the central plan is projected to increase by Rs 35,711 crore in 2009-10. The other component of plan expenditure, central assistance to states, will see an increase of Rs 6,481 crore.
Revenue expenditure, which accounts for 88 per cent of the total spending, is expected to increase by 12 per cent to Rs 8,97,232 crore in 2009-10. Capital expenditure is estimated at Rs 1,23,606 crore as compared to Rs 97,507 crore in 2008-09.
Defence accounts for nearly half of the Rs 26,099 crore increase in capital expenditure. The rest is mainly towards increased transfer to states and for the central plan.
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