The Hindu Business Line : Jaswant asks Ministries, depts to tighten belt

WITH the Government under pressure to meet the funding requirements of drought-hit States, the Finance Minister, Mr Jaswant Singh, sent out a clear message to all Central ministries and departments to curtail unproductive expenditure and maximise savings.

In his first meeting with financial advisors of various Ministries and departments, Mr Singh, however, made it clear that expenditure compression should not be at the cost of Plan investments.

Mr Singh also asked various Ministries to drop the practice of parking funds in autonomous institutions under their fold and bunching of expenditures in the last quarter of the fiscal.

Although the fiscal deficit up to the end of September stood at around 2.26 per cent of the GDP against the budgeted estimate of 5.3 per cent due to higher tax revenues, it remains uncertain whether the buoyancy in tax collections would continue. The fisc would come under pressure in case hefty fund releases are to be made in the second half of the current fiscal for drought relief.

There are varying estimates on the fund requirements of drought-hit States. Projections made by State Governments indicate that the additional fund requirements could top a hefty Rs 15,000 crore. The Central teams that had visited the drought-hit States are, however, yet to give their assessments on the extra fund requirements, based on which further releases would be made.

The Finance Ministry is, however, hopeful of meeting these requirements through allocations already made under various rural development schemes such as the Sampoorna Gramin Rojgar Yojana and the food-for-work programmes. The allocation towards these schemes is around Rs 13,760 crore for this fiscal.

There could also be a slippage in the food subsidy bill over and above the budgeted level of Rs 13,675 crore, following the Rs 20 per quintal hike in the minimum support price of paddy.

Although there are apprehensions about a possible surge in petroleum subsidies beyond the budgeted level of Rs 6,495 crore, there has not been any expenditure under this head so far. The expenditure compression, last fiscal, was mainly on account of savings in defence expenditure. A repeat of this could happen this fiscal too.

Finance Ministry officials, however, reckon that a clear picture on the trends in expenditure would be available when the revised estimates are worked out after detailed deliberations with all the Ministries.

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