Modi wanted infrastructure funding protected

Allocations for infrastructure sectors such as roads and highways remain more or less the same.

“The new government’s spending priorities are different from the previous one… the Centre’s intentions are that social expenditure can be cut but expenditure on physical infrastructure must be protected as far as possible and so these sectors will face only minor cuts in spending if at all,” said a top source at the Infrastructure Ministry.

The new order of spending priorities is likely be maintained in the next budget due in February too.

The latest round of spending cuts is expected to hurt the social sector as the budget estimates were pegged 15 per cent lower than the previous year. This is because the UPA government had built into the interim budget’s estimates 15 per cent across-the-board plan spending cuts.

Union Finance Minister Arun Jaitley had retained most of these cuts in the budget he presented on July 10.

In the budget, Mr. Jaitley provided Rs. 80,043 crore as central plan outlay for rural development. For school education and literacy it provided Rs. 51,828 crore. In addition, secondary education was to receive Rs. 8,579 crore and higher education Rs. 16,900 crore.

The budget had allocated plan outlay of Rs. 30,645 crore to the Department of Health and Family Welfare.

Mr. Jaitley had set himself a fiscal deficit target of 4.1 per cent of Gross Domestic Product (GDP) for the year in the budget. The calculations had assumed a 13.4 per cent growth in the ‘nominal’ GDP.

Both inflation and GDP growth this year are likely to be lower than expected at the time of budget-making.

The Ministry has projected that tax collections will miss the budget target.

To keep the fiscal deficit within target the government needs to curb expenditure and raise non-tax revenue such as from disinvestment proceeds.