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Hard-pressed for funds, the Central Government may ask states to surrender the funds which are unlikely to be utilised for ongoing schemes during the course of current financial year.
“States can be asked to surrender funds mid-year which they think they will not be able to utilise during the fiscal,” a finance ministry official said.
This, sources said, would help the Centre in managing its finances in a better manner, especially at a time when the financial position is tight and there is threat of global agencies downgrading India’s sovereign rating to ‘junk’ grade.
Unutilised funds anyway lapse at the end of the fiscal, sources said, adding that the surrender of funds by them during the course of the financial year would help the Centre to tide over its stressed financial position.
The Government’s fiscal deficit is likely to exceed the budget target of 5.1 per cent of GDP on account of rising fuel, food and fertiliser subsidy bills.
Fiscal deficit
Finance Ministry officials have already indicated that it would be difficult for the Government to maintain fiscal deficit at the budgeted level.
Ratings major Standard & Poor’s in its recent report indicated that the fiscal deficit could go up to as high as 6.1 per cent of the GDP. In 2011-12, the fiscal deficit was 5.76 per cent.
Finance Minister P. Chidambaram, soon after he assumed office in August, appointed a three-member expert panel headed by former Finance Secretary Vijay Kelkar to suggest a fiscal consolidation roadmap.
Among other things, the Kelkar panel recommended hike in price of cooking gas and kerosene, besides making a case for sharp reduction in oil and fertiliser subsidy.
Besides, lower rate of growth in tax revenues and poor off-take from the disinvestment programme is adding to the fiscal woes of the Centre.
During the April-September period, gross direct tax collection rose by 5.9 per cent, as against the target of 15 per cent.
Indirect tax collections grew at 15.6 per cent, against the annual target of 27 per cent.
Further, with six months of the fiscal already over, the Government has yet to start its disinvestment programme, through which it aims to raise Rs 30,000 crore in 2012-13.
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