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With the pandemic upsetting routine calculations, the Government will not apply conventional methods to calculate Revised Estimates (RE) for the current fiscal and Budget Estimates (BE) for next year, said Finance Secretary TV Somanathan.
He expressed confidence that the fiscal deficit for the current fiscal will be close to BE although expenditure was low in the first half.
No thumb rule
In an exclusive interview to BusinessLine , Somanathan said expenditure in the first half of this fiscal has been shaped by the upheaval caused by the pandemic. Therefore, the normal thumb rules will not apply. The proposed expenditure in the Budget (BE) is normally revised based on a number of elements and expenses in the first half and made public in the next Budget as Revised Estimates (RE), he explained. The RE for 2021-22 and BE for 2022-23 in the next Union Budget, likely to be presented on February 1, will not be based on the mid-year review.
“We have to be rational and assume that the second half may be very different from the first half. We are not necessarily applying any crude or traditional rules as this is a very different year,” Somnathan said.
Somanathan said the expenditure on vaccination and healthcare will not be the same as estimated in the Budget.
“It will be a bit higher than ₹35,000 crore projected in the Budget. Definitely, there will be supplementary requests in the next session of Parliament,” he said.
Rejects economists’ view
On Budget calculations, Somanathan said for the first six months, the Government has spent over ₹16.26-lakh crore, which is around 47 per cent of the BE; last fiscal, it was more than 48 per cent of BE.
He rejected the view held by various economists that since expenditure has been on the lower side in the first half, it implies that overall expenditure will be low which, in turn, will have an impact on the fiscal deficit. Some economists expect the fiscal deficit to be 20-50 basis points lower.
On the contrary, Somanathan said he expects the expenditure to go up in the second half and that will have a proportional consequence for the fiscal deficit.
“The first quarter was a washout. We took some precautionary steps (in the second quarter). Now we have removed those restrictions. I think we will end the year with a fiscal deficit that is close to the BE,” he said.
Click here to read full interview
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