New Delhi: Finance Minister Arun Jaitley couldn't have asked for anything better. The minister will get Rs 80,000 crore benefit from money unspent by the government departments, provided to them in the last budget as plan expenditure allocations.
The unspent funds will possibly help the FM to meet the tough fiscal deficit target in FY15 caused due to shortfall in tax revenue.
Jaitley will present the government's accounts for the current financial year in his February 28 budget. The fiscal deficit target for this year is 4.1% of GDP.
The total budgeted plan expenditure for fiscal year 2014-15 was pegged at 5.75 lakh crore out of which only 3.526 lakh crore could be spent by the end of December.
And, according to a government rule, not more than one-third or 33% of the budgeted allocation can be spent in the last quarter and not more than 15% in March.
This rule applies to the overall ministry or department expenditure. It prevents any last minute surprises by the ministries which can topple the entire allocated expenditure.
“Plan spending started with a huge lag due to elections and a full budget was allocated in July. And it got underway only from September,” a govt official told The Economic Times.
In the current scenario, ministries and departments are not in a position to utilize the allocated budgets; hence overall allocations are expected to get cut in the revised estimates which will be provided on February 28.
The only departments which were able to utilize maximum funds were roads and aviation ministries. The Road Transport and Highways ministries spent 87% of the budgeted allocation out of 28,881 crore while the civil aviation ministry spent 80% of the budgeted 6720 crore.
The ministries of communications, home affairs, agriculture, health, water and sanitation, and human resource development were not able to utilize allocated plan expenditures fully.
In the last two financial years, there has been no move to cut down the plan spending to keep fiscal deficit in check.
Although, the new government did make efforts to push expenditure to lift growth but a proposed revamp of centrally sponsored schemes and a delay in spending acted as a pull down for the same.
Economists are speculating that the unspent amount in FY15 will make it the third year in spending reduction cycle.
According to Madan Sabnavis, chief economist, Care Takings, “Tax revenues have not grown as estimated.”
In contrast to this, Reserve Bank of India Governor Raghuram Rajan said on Tuesday that the government will be able to meet the fiscal deficit target for FY15.
Reportedly, Jaitley has already said that he will be able to stick to the fiscal deficit target of 4.1% of GDP in the financial year.
