Faced with huge fiscal deficit, I had to rationalise expenditure, says Chidambaram
Union Finance Minister P. Chidambaram shaved off Rs. 91,838 crore from the budgeted Plan expenditure of Rs. 5,21,025 crore for the current fiscal in the backdrop of a growing fiscal deficit.
The budget-2013 has projected revised estimates of the Plan expenditure at Rs. 4,29,187 crore for the current fiscal. For 2013-14, the government has also raised the Plan expenditure by just 6.58 per cent to Rs. 5,55,322 crore (33% of the total proposed expenditure) from the Budget estimates of Rs. 5,21,025 crore for the current fiscal.
However, the jump in the Plan expenditure for 2013-14 is 29.4 per cent when compared to the revised estimates of the same for the current fiscal at Rs. 4,29,187 crore.
The Plan expenditure budget estimates for the current fiscal, at Rs. 5.21 lakh crore, was about 18 per cent higher than the budget estimates of such expenditure at Rs. 4,41,547 crore for 2011-12.
The Plan expenditure is the government spending on social sector schemes such as Bharat Nirman, the Mahatma Gandhi National Rural Employment Guarantee Act and the National Rural Health Mission. Besides, it includes the Centre’s assistance to States and Union Territories.
The Finance Minister has pegged the fiscal deficit for the current fiscal at 5.2 per cent of the gross domestic product and at 4.8 per cent for 2013-14. The government has targeted a 5.1 per cent fiscal deficit for 2012-13 in last year’s budget.
“In the budget for 2012-13, the estimate of Plan expenditure was too ambitious and the estimate of Non-Plan expenditure was too conservative. Faced with huge fiscal deficit, I had no choice but to rationalise expenditure. We took a dose of bitter medicine. It seems to be working,” Mr. Chidambaram said in his speech in the Lok Sabha.
“Government expenditure boosts aggregate demand and it has both good and bad consequences. Wisdom lies in finding the correct level of government expenditure,” he said.
Mr. Chidambaram said: “I have been able to set the budget estimates of total expenditure at Rs. 16,65,297 crore and of Plan expenditure at Rs. 5,55,322 crore. Plan expenditure in 2013-14 will be 29.4 per cent more than the revised estimate of the current [fiscal] year. All flagship programmes have been fully and adequately funded.”
“I dare to say I have provided sufficient funds to each Ministry or department consistent with their capacity to spend the funds. Now it is over to the Ministries and departments to deliver the outcomes through good governance, prudent cash management, close monitoring and timely implementation.”
The Non-Plan Expenditure for 2013-14 is budgeted at Rs. 11,09,975 crore, which is 14.5 per cent higher than the budget estimate of Rs. 9,69,900 crore for the current fiscal. The proposed Non-Plan expenditure in 2013-14 is 10.81 per cent higher than the revised estimate of Rs. 10,01,638 crore.
The total proposed expenditure of Rs. 16,65,297 crore for 2013-14 constitutes an increase of 11.7 per cent over the Budget Estimates of Rs. 14,90,925 crore for the current fiscal.However, the total budgeted expenditure for 2013-14 is 16.4 per cent higher than the revised estimate of Rs. 14,30,825 crore for the current fiscal. Mr. Chidambaram said he expected “to transfer resources to the tune of Rs. 5,87,082 crore to the States and Union Territories under share of taxes, non-plan grants and loans, and Central assistance.”
He also announced restructuring of Centrally Sponsored Schemes (CSS) as recommended by the B.K. Chaturvedi Committee.