Rs 3000cr Savings In Plan Spending Likely Ministries Resent
The government is set to end the current fiscal with savings of Rs 3,000 crore in its annual plan expenditure thereby containing the fiscal deficit within the targeted level.
The ministry has adhered in letter and spirit to the new expenditure policy pronounced by the government soon after it assumed power. Drafted by the then expenditure secretary N K Singh, the policy had spelt out clear parameters for departmental spending.
In fact, as late as December the finance minister had convened a meeting of financial advisors to take stock of the expenditure trends. The finance ministry also had to take into account some additional heads of expenditure which were not budgeted for.
Additionally, with revenue receipts under some heads witnessing sluggish trends, the ministry was hard pressed to accommodate, among other things, additional expenditure for defence and special plan assistance to Jammu and Kashmir.
Detailing the extra expenditure being incurred by the government, sources said that in addition to the supplementary grant of Rs 2,170 crore moved in the winter session of parliament, other items include Rs 1,200 crore on defence services, Rs 650 crore as special plan assistance for Jammu and Kashmir, Rs 150 crore on the space programme and Rs 170 crore as additional budgetary support for the Railways to meet certain capital expenditure.
The Plan investment for 1996-97 is likely to fall short of the target, thereby saving the Centre budgetary support to the tune of Rs 3,000 crore, say senior finance ministry sources. Plan investment is made up of budgetary support and resources raised either internally by a department or through floatation of debt instruments.
The finance ministrys tactics in curbing expenditure have not gone down well with other ministries. They alleged that the saving was across the board and that in several cases was not natural but a kind of forced saving in order to show a lower deficit.
They further argued that the expenditure department in the finance ministry had often delayed disbursements on various counts on the grounds that conditionalities attached to the disbursements have not been met. Sources maintain that the same principles are to be adopted in the next fiscal year when the government proposes a lower fiscal deficit target.
The fiscal deficit target for 1997-98 is expected to be pegged at 4-4.5 per cent of gross domestic product. The nominal GDP for 1997-98 is expected to be around Rs 14,00,000 crore, said government sources.
In the current financial year, it is expected that the government is likely to end up with a fiscal deficit of around 5.2 per cent of GDP, as compared to the target of 5 per cent.
The shortfall in the divestment target of Rs 5,000 crore has been completely offset with no outgo by way of the Pay Commissions recommendations, which are still being considered by the government.