Centre may cut expenditure by Rs 50,000cr to meet FY19 fiscal deficit target
The Centre may trim its FY19 budgetary expenditure by Rs 50,000 crore, or 2 percent from the estimated level, to meet its fiscal deficit target of 3.3 percent of GDP, The Financial Express reported.
“The ministries or departments, which are laggards in spending in the first half of this year, may see budget cuts,” an official told the paper.
Defence and social-sector spending may feel the pinch of reduced budgetary expenditure, according to the report. The Defence Ministry has spent 57 percent of its budget of Rs 4.04 lakh crore in H1 FY19. It may, however, spend a few thousand crore less than the budgeted estimate.
Until now, ministries of communication, food processing industries and sports have spent only 30-40 percent of their annual budget, the report said.
The move may be necessary as non-tax revenue could be significantly below the budget target. There are also uncertainties over indirect tax receipts, despite the government’s public assertions that the aggregate tax receipts would be in line with the budget, the report said.
Net tax receipts, after refunds and devolution to states, grew just 7.5 percent in H1 FY19 as against the 19 percent target for the year.
The Centre needs over Rs 54,000 crore monthly gross (pre-devolution) revenue from the Goods & Service Tax to meet its budget estimate. In April-October, on an average, the Centre received Rs 39,000 crore in GST revenue. In October, the Centre earned GST revenue of around Rs 49,000 crore. The revenue gap is said to be too wide to be bridged in the next five months.
It may also face a Rs 20,000-crore shortfall in telecom revenue due to the weak financial health of telecom firms and sees a deficit of Rs 20,000-25,000 crore in its divestment target of Rs 80,000 crore as many of the transactions planned for the year, including the ONGC-HPCL deal, are still in the pipeline.
According to the report, the Centre has lined up plans to raise a massive Rs 1.7 lakh crore via the extra-budgetary resources in FY19 to keep public spending robust.