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The Finance Ministry is not looking to cut expenditure to dress up its balance-sheet and show better numbers in 2015-16,despite the mounting fiscal pressure.
This is a major departure from the past few years when expenditure cuts have been the favoured option to keep the fiscal deficit under control. The government’s confidence comes from significant savings on the oil bill.
With the softening of crude oil prices, the country’s subsidy bill has dropped by at least ₹20,000 crore. Global Brent oil prices are still far below the $69 per barrel assumed in Union Budget 2015-16.
“The fiscal deficit target of 3.9 per cent of GDP for 2015-16 will be met. But instead of trying to improve this by lowering the deficit further, the main objective this year will be to ensure that there are no expenditure cuts,” said a senior government official, stressing that it is imperative to help boost growth.
More spending headsNew spending heads, including implementation of the Seventh Pay Commission report and the higher pension outgo due to the acceptance of the One Rank One Pension (OROP) demand of the armed forces, have sprung up before the exchequer. Added to this is the shortfall of at least ₹25,000 crore in disinvestment proceeds against the ₹69,500 crore budgeted for 2015-16.
In fact, the government is likely to change its disinvestment target significantly in the revised Budget estimates.
On the implications of the Seventh Pay Commission’s recommendations on the government’s finances, another official said: “The outgo will be factored in based on its date of implementation and the recommendations accepted. So, it may not be immediate.”
The expenditure on OROP is estimated at ₹2,500-₹3,000 crore this fiscal. “The scheme is yet to be notified. The payment is likely to be only for one quarter of the fiscal, which can be absorbed in this year’s spending plan,” said the official.
The Finance Ministry has factored in significant savings, of at least ₹20,000 crore, in its fuel subsidy payments for the fiscal and revenue gains through higher excise duties on petroleum products, which have touched ₹80,208 crore in the first five months of the fiscal.
The Finance Ministry also plans to keep the cash outgo in the second Supplementary Demand for Grants that is tabled in the Winter Session of Parliament at a minimum. “Any significant requirement for additional funds will now be discussed at the time of the third Supplementary,” said the official.
The government had sought a net cash outgo of ₹25,495 crore in the first Supplementary Demand for Grants.
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