The government has prioritised spending towards areas such as rural development and agriculture to generate larger benefits for the economy, and restricted expenditure in non-priority areas during the first four months of the current fiscal year. Even as the total government spending during April-July has increased 11 per cent despite a steep fall in revenue, priority areas have seen significant jump, Expenditure Secretary TV Somanathan said.
Rural development spending, for instance, rose 145.4 per cent to Rs 1,02,096.5 crore in April-July 2020, from Rs 41,589.2 crore in April-July 2019.
“The overall figure reflects a sharp increase in priority areas, accompanied by conscious re-prioritisation of those areas which are of lower benefit to the economy. The focus of government expenditure has been in the priority areas such as Rural Development, Agriculture Cooperation and Farmers Welfare, Health, Transfer to States, GST Compensation, Health Research, Labour and Employment,” he said in a reply to queries from The Indian Express on whether the present level of government spending was sufficient to to revive the economy.
Official data showed that the Centre’s total expenditure in April-July increased by about Rs 1.07 lakh crore, or about 11.3 per cent — up from Rs 9.47 lakh crore in April-July last year to Rs 10.54 lakh crore this year. Many industrialists, economists as well as the Reserve Bank of India have suggested a government-led spending push to revive the economy, which contracted by a record 23.9 per cent in terms of Gross Domestic Product in the April-June quarter.
Somanathan said as a percentage of reduced GDP in the first quarter, the increase in total expenditure is large and transfers to states have risen 35 per cent despite a steep fall in Central revenues. While the Rs 20 lakh crore Atmanirbhar Bharat package relied on liquidity measures injected by the RBI and cash transfers to the poor and needy, there are now calls for a renewed fiscal push to revive growth.
“The prioritisation of expenditure has been done by restricting expenditure in Non-priority areas to 20 per cent and 15 per cent for the quarter in certain categories of ministries. 40 grants out of 101 have been restricted to 20 per cent or less expenditure to allocate funds to priority areas. These include Grants such as: Youth Affairs and Sports, Tourism, Culture, Steel, Statistics and Program Implementation, Space, Shipping, Science and Technology, Land Resources, Planning, Parliamentary Affairs etc,” he said.
The government also tried to push up capital expenditure — to Rs 1,11,849 crore in April-July 2020 as compared to Rs 1,07,605 crore in April-July 2019 — despite difficulties being faced during the lockdown. Achieving an increase in the present circumstances reflects the strong push the government has given to this high multiplier sector, he said. Highest capital expenditure of Rs 34,304.44 crore was done in defence services, followed by Rs 23308.74 crore in railways and Rs 22,854 crore in road transport and highways.
During April-July, expenditure under Centrally Sponsored Schemes rose by Rs 59,155 crore to Rs 1,54,872 crore, with MGNREGA (National Rural Employment Guarantee Scheme) accounting for Rs 51,445 crore, followed by National Livelihood Mission (Ajeevika) at Rs 35,190 crore.
Under the 85 major central sector schemes — which constitute 90 per cent of total Budget estimates under the head — there has been an expenditure of Rs 2,59,731 crore in April-July 2020, which is 38,347 crore less than that in April-July 2019. The government spent Rs 28,621 crore under PM Kisan scheme during the first four months of this fiscal.
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