The Centre has decided to put a brake on additional spending and is expected to limit the first supplementary demand for grants at Rs 12,000 crore. The net cash outgo in the demand for grants will not be more than Rs 10,000 crore to Rs 12,000 crore as we have told all ministries that funds will be provided only for any urgent or unforeseen purpose, a finance ministry official said,adding that additional spending on new schemes or projects will not be accepted.
This is in contrast to last fiscal when the government took Parliamentary approval for spending an additional Rs 68,294.30 crore in the first supplementary demand for grants to spend on various programmes and projects.
The high spending last year was only because we had the comfort of additional money from the 3G spectrum auction. The situation has changed considerably since then, the official said.
The demand for grants will be tabled in Parliament in the Monsoon session which starts on Monday. According to sources,the government will not even seek extra money for fuel subsidy,but will instead wait till December to get a clearer estimate.
All ministries have been asked to work within the Budget estimates and meet any additional expenditure through internal savings. Any increase in spending will now be done later in the year, the official said.
The Centre aims to reduce its fiscal deficit to 4.6 per cent of the GDP in 2011-12,but lower than expected revenue realisation as well as higher expenditure are posing a threat. Last month,its finances took a further hit of Rs 24,000 crore following duty cuts on crude oil.
Already,government finances are showing worrying trends as lower revenue collections have led to significantly high deficits. Figures released by the Controller General of Accounts on Friday reveal that the Centres fiscal deficit soared to 39.4 per cent of the full fisc target to Rs 1,62,653 crore by June end 2011. Similarly,the revenue deficit has shot up to 43.8 per cent of the BE to touch Rs 1,34,621 crore between April and June 2011.
Both the revenue and fiscal deficits were much lower a year ago after windfall gains of over Rs 1 lakh crore from the auction of 3G spectrum. While the fiscal deficit stood at a mere 10.5 per cent of the Budget estimate,the revenue deficit amounted to just 3.8 per cent of the full fisc target in the first quarter of 2010-11.
Total receipts,including tax collections and non tax revenue receipts amounted to a mere 11.7 per cent of the BE at Rs 98,564 crore by June end while total expenditure was Rs 261217 crore or 20.8 per cent of the BE by June end. The finance ministry recently came out with strict austerity instructions banning foreign tours,and holding conferences in five star hotels.