Government Won’t Prune Spending To Meet Fiscal Deficit Target: Finance Ministry Official
Strong indirect tax collections, collections from IDS provide buffer to budget.
The government is not considering expenditure cuts to meet the fiscal deficit target for the current year, a senior finance ministry official said on Monday, speaking on the condition of anonymity.
The official was responding to concerns that the government may find it difficult to meet the 3.5 percent fiscal deficit target since it has already exhausted 76 percent of the deficit amount between April-August.
“There will be no forced spending cuts,” said the official while pointing to buoyancy in indirect tax collection as one factor that may help the government meet budget targets. Indirect tax collections during the first half of the current financial year grew 26 percent year-on-year to Rs 4.08 lakh crore.
The official also said that collections from the Income Disclosure Scheme and the telecom auctions will also help keep deficit calculations on track.
The total expenditure of the government in the current fiscal year is Rs 19.78 lakh crore. Of this, Rs 5.50 lakh crore is set aside for plan expenditure and the remaining Rs 14.28 lakh crore will go towards non plan expenditure.
The official cited above said that cutting spending was not an option even though there was some shortfall in collections from spectrum auctions. Revenue from other sources like IDS provide a buffer to the government, the official said.
Nearly 60 percent of the airwaves were left unsold at the recently concluded spectrum auction. The government managed to collect Rs 65,789 crore from the auction, much lower than the estimate of Rs 5.6 lakh crore.
The four-month voluntary black money disclosure scheme received declarations worth Rs 65,250 crore which will yield around Rs 29,000 crore in taxes. 50 percent of that will come during this fiscal year.
According to the official, the only challenge is to achieve the strategic stake sale target, “but the department is confident that it will achieve the target.” The government has laid down a strategy to meet its disinvestment goals, the official said.
The government has set a disinvestment target of Rs 56,500 crore this year. Of this, Rs 36,000 crore is estimated to come from minority stake sales in public sector companies and Rs 20,500 crore is targeted from strategic stake sale in both profit-making and loss-making PSUs.