Higher outgo to States leads to a cut in Plan expenditure

Greater outgo of revenue to States has led to government cutting its Plan expenditure for 2015-16.

The Budget estimates for 2015-16 peg Plan expenditure at ₹4,65,277.04 crore, nearly 20 per cent or ₹1,09,722.96 lower than last year’s Budget estimates.

In fact, the Plan expenditure, as per the Budget estimates, is ₹2,656 crore lower than even the revised estimates for 2014-15.

This is despite the target for tax receipt being kept at ₹14,49,490.56 crore, an increase of 6.2 per cent or around ₹84,966 crore over last years Budget estimates.

This fall can be attributed to the fact that this year the Government has accepted the 14{+t}{+h} Finance Commission’s recommendations and given States a greater share of the revenues.

Shortfall in tax receipts and missing the disinvestment target had resulted in a fall in Plan expenditure by the Government in 2014-15.

As per the revised estimates for 2014-15, Plan expenditure fell nearly 18.6 per cent to ₹4,67,933 crore against the Budget estimates of ₹5,75,000 crore for the year. The fall was of ₹1,07,067 lakh crore.

A major reason for the fall can be attributed to the decline in tax receipts for the year.

There was shortfall of ₹1,13,133 crore in tax receipts as per the revised estimates, compared with the Budget estimates for 2014-15.

The revised estimates for 2014-15 peg tax receipts at ₹12,51,391 crore, against Budget estimates of ₹13,64,524 crore.

Coupled with this, the Government also failed to meet its disinvestment target.

It could only mop up ₹26,353 crore, against its target of ₹43,425 crore, resulting in a shortfall of nearly ₹17,072 crore.