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Expenditure to rise only 3.3% in 2011-12

BS Reporter 

EXPENDITURE: At Rs 12,16,575.24 cr, govt spending rose 19% in 2010-11 over that in 2009-10.

With the government opting for fiscal consolidation, Finance Minister Pranab Mukherjee has projected a mere 3.3 per cent increase in the total government spending, at Rs 12,57,728.83 crore, during 2011-12. The revised estimates for 2010-11 show that the government spending, at Rs 12,16,575.24 crore, increased 19 per cent this year, over that in 2009-10.

The tight control in spending will result in lower capital expenditure next year. It is projected to decline over 1 per cent to Rs 12,57,728.83 crore in 2011-12 — a fact that economists see as the government sacrificing asset creation to bring expenditure under control.

The projected decline in the government’s non-Plan expenditure, by about Rs 5,370 crore to Rs 8,16,182 crore in 2011-12, is a healthy sign for the economy. The estimated non-Plan expenditure constitutes 65 per cent of the total government spending, compared to 67 per cent in 2010-11. According to Finance Secretary Sushma Nath, this is primarily because the government expects redemptions to be less next year. Non-Plan expenditure is a term used for both development and non-development expenditure and includes salaries, interest payment and spending on assets created through the previous Plan spending.

Plan expenditure, which broadly includes spending on assets and is perceived to provide a push to the economic growth, is estimated to be Rs 4,41,546.75 crore next year — an increase of about 12 per cent over the revised estimates of 2010-11. At Rs 3,95,024 crore, Plan spending during the current year is, however, 30 per cent more than that in 2009-10.

The total Central Plan size, at Rs 5,92,456.99 crore, is projected to rise next year by about 18 per cent over the revised estimates for the current year. Of this, the budgetary support of Rs 3,35,521 crore would constitute around 57 per cent, while the rest would come from public sector enterprises.

An additional Rs 1,06,025.75 crore would go to states and union territories as Central assistance. This reflects a 10 per cent increase over the revised estimates for the current year. According to Mukherjee, this includes grants of Rs 13,713 crore to local bodies, in accordance with the recommendations of the 13th Finance Commission.

The finance minister also mentioned that the 11th Plan expenditure in nominal terms was more than 100 per cent of the expenditure envisaged for the Plan period.

The expenditure budget this time also added a new head — of grants for creation of capital assets. This expenditure was earlier taken under revenue expenditure as grants to states. A total of Rs 1,46,853 crore has been provided for under the new head.

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First Published: Tue, March 01 2011. 00:10 IST