Govt unlikely to substantially hike plan outlay in 2014-15

The fiscal deficit needs to be kept in check

The new government is unlikely to substantially enhance the Plan expenditure for 2014-15 in the Budget to be unveiled next month because it needs to keep fiscal deficit in check.

The plan expenditure, or GBS (gross budgetary support), is the government spending on social sector schemes such as Bharat Nirman, rural employment guarantee and National Rural Health Mission.

"In present economic scenario, the new government may not go for substantial increase in the Plan expenditure over what was provided in the interim budget in order to control fiscal deficit," an official said.

After assuming office in 2004, the UPA government in its regular budget had pegged the total Plan expenditure at Rs 1,45,590 crore, which was not very substantially higher than Rs 1,35,071 crore provided in the interim budget for 2004-05 by previous NDA government.

Similarly this time, the Plan expenditure could be little over Rs 5,55,322 crore provided in the interim budget for the 2014-15 by previous government.

The UPA government had cut the total Plan expenditure to Rs 4,75,532 crore for 2013-14 compared to the budget estimates of the Rs 5,55,532 crore, for keeping a tab on the fiscal deficit. This was second year in a row when UPA government cut Plan spending substantially to keep fiscal deficit under control.

According to the latest government data, the fiscal deficit in 2013-14 stood at 4.5 per cent of Gross Domestic Product (GDP), lower than 4.6 per cent projected in the revised estimate, mainly on account of curbs on government expenditure.

The fiscal deficit, the gap between government's expenditure and revenue, in actual terms was Rs 5.08 lakh crore as against Rs 5.24 lakh crore projected in the revised estimate.

The lower fiscal deficit reduces the government's expenditure on interest payment and unlock funds for investments in social welfare programmes as well as infrastructure development.