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Jaitley cuts 2015-16 plan expenditure by Rs 2,657 cr

Budget support to go up 35%

BS Reporter  |  New Delhi 

Arun Jaitley

To meet the stiffer fiscal deficit target of 3.9 per cent of gross domestic product in 2015-16, Finance Minister Arun Jaitley has lowered Plan expenditure for the year by Rs 2,657 crore from the revised estimate (RE) of Rs 4,67,934 crore for the current financial year.

However, the total central Plan, sum of the Centre’s budgetary support and resources from central public sector units (CPSUs) for 2015-16, is projected to rise by 35.5 per cent. However, mainly due to an expected rise in contribution from the latter, not from support. Resources from CPSUs are expected to contribute around 55 per cent of the total Plan outlay of the central government, against 45 per cent in the RE for 2014-15 and 51.1 per cent in the earlier estimate (BE) for that year. In absolute terms, CPSUs are expected to contribute almost Rs 70,000 crore more in 2015-16 from the BE of 2014-15. The tightening in Plan expenditure has started from the current financial year itself, the data showed. The revised plan expenditure of 2014-15 was around 19 per cent less than the 2014-15 BE of Rs 575,000 crore. Meaning the central ministries were squeezed for funds and allocation under major programmes went down. For example, in the Mahatma Gandhi National Rural Employment Scheme, against the 2014-15 BE of almost Rs 34,000 crore, the Centre provided Rs 32,456 crore this year, about 2.7 per cent less. The 2015-16 BE is Rs 33,700 crore, a meagre 3.8 per cent more from the RE. .

Read our full coverage on Union Budget Jaitley, though, assured Parliament he’d enhance the allocation by another Rs 5,000 crore if he got more from improved tax collection.

For the Pradhan Mantri Gram Sadak Yojana, on construction of roads in rural areas, the allocation was lowered by Rs 172 crore in 2014-15 as against the earlier BE of Rs 5,611 crore. The squeeze wasn’t limited to central ministries but hit the states, too. Central assistance to state plans was lowered from the Rs 338,408 crore in the 2014-15 BE to Rs 278,168 crore in the RE, a fall of 17.8 per cent. In the 2015-16 BE, this is estimated to further drop to Rs 204,784 crore. The difference is expected to be part of the transfer that will be made directly to state treasuries as part of the 14th Finance Commission recommendations and also on account of the reorganisation of centrally sponsored schemes, whose number is now 31.

Another set of eight schemes, which include modernisation of police forces, the backward region grant fund and the Rajiv Gandhi Panchayat Sashaktikaran Yojana would be entirely funded by the state governments from now on.

A third set of central schemes, which includes the Rashtriya Krishi Vikas Yojana and Prime Minister Narendra Modi’s pet Swacch Bharat Abhiyan, will be funded jointly by the central and state governments. The new sharing pattern is to be determined by the respective ministries and departments; it won’t be the usual 75:25 split. Budget support to the central plan, which is plan expenditure minus the central support to state plans, in 2015-16 is expected to be raised by Rs 70,727 crore. A big chunk of this will come from CPSUs and the finance minister would increasingly rely on these enterprises to fund his plan spending.

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First Published: Sun, March 01 2015. 00:43 IST