Squeeze likely in Plan spending

Allocation rise likely to remain flat in interim Budget, given the limited room for manoeuvre

Fiscal strain is likely to force the government not to allocate any extra money in Plan expenditure (PE) in the interim Budget for 2014-15, compared to the Budget Estimate (BE) for the current financial year. The amount could be kept unchanged at Rs 5,55,322 crore for 2014-15, notwithstanding the pressure from a general election.

Of this, the share to the central Plan is expected to remain Rs 4,10,068 crore and the states' Plan at Rs 1,36,254 crore, both the same as the BE of 2013-14. "This has been largely done in view of the stressed fiscal condition," a senior official said.

Over the first nine months of this financial year, the Centre's fiscal deficit had touched a little over 95 per cent of the BE for 2013-14.

It would probably be the first time an interim Budget would not see higher PE as compared to a BE of the previous year. For instance, the PE was raised to Rs 2,85,149 crore in the interim budget for 2009-10 against the BE of Rs 2,43,385 crore in 2008-09. Similarly, the PE was raised to Rs 135,071 crore in the BE of interim budget 2004-05 as against a BE of Rs 1,20,974 crore in 2003-04.

The government has a fiscal consolidation plan till 2016-17, by which the Centre's fiscal deficit has to go down to no more than 4.2 per cent of gross domestic product in 2014-15, from an estimated 4.8 per cent in this financial year.

For instance, the plan expenditure was raised to Rs 2,85,149 crore in interim Budget for 2009-10 against BE of Rs 2,43,385.50 crore in 2008-09.

Similarly, the Plan expenditure was hiked to Rs 1,35,071 crore in the BE of interim budget 2004-05 as against BE of Rs 1,20,974 crore in 2003-04

The revised estimate (RE) for 2013-14 might also face a severe cut as compared to the BE, as the government struggles to keep its fiscal deficit at 4.8 per cent of GDP. Till December, the government had incurred Rs 3.51 lakh crore under PE, about 63.3 per cent of the BE. At this point, expenditure under the Plan head had accounted for 56.8 per cent of the BE in 2012-13. Even then, PE was cut by Rs 91,838 crore in RE against the BE for FY13.

Earlier, officials had said PE might be cut by almost Rs 80,000 crore in the RE of 2013-14, compared to BE. If so, the BE for plan spending at Rs 5,55,322 crore in 2014-15 will show a 16 per cent increase from the RE.

However, more than expected revenue from the telecom spectrum sale and the possibility of residual stake sales in Hindustan Zinc and Bharat Aluminium, as well as from the direct disinvestment programmes, might not necessitate such a hefty reduction in PE for 2013-14.

Officials said continuing with its focus on social sectors, the PE in health is expected to be increased heftily, while that on human resource development was likely to be raised by Rs 1,538 crore.

However, the rural development ministry, which has the flagship rural job guarantee scheme under it, might see an almost Rs 8,000 crore cut to Rs 81,671 crore as compared to the 2013-14 BE. The PE for science & technology and civil aviation might also see a reduction in the 2014-15 interim Budget, as compared to the BE of 2013-14.