The Vijay Kelkar committee, appointed by finance minister P Chidambaram to formulate the fiscal consolidation roadmap, is likely to stress on boosting non-tax revenue while fixing the disinvestment calendar for the current fiscal year. With a slowing economy likely to result in less than expected tax collections, the government is banking on non-tax revenue sources such as selling equity in public sector companies and auction of 2G telecom spectrum to nurse its precarious finances.
The Kelkar panel is also likely to prescribe scrapping of a few centrally-sponsored schemes.
The panel had been advised to come up with a prescription beyond advocating a hike in diesel and LPG prices to contain a rising fiscal deficit. The report is set to be ready in the next few weeks.Chidambaram has indicated to all ministries that spending would be prioritised and the ministry could have a relook at few allocations.
Though the upcoming 2G spectrum auction slated later during the year and stake sale in various public sector units will likely curb a rising fiscal deficit, experts fear that the United Progressive Alliance (UPA) could announce populist measures to boost its sagging image while adding to the fiscal burden.
The government has set a fiscal deficit target of 5.1% for the current financial year.
“Adjustments must be made both on the revenue side and on the expenditure side,” the finance minister recently said.
Chidambaram has also underlined the need to stick to the projected fiscal deficit target to ensure that the “India story” remained unhindered, said sources.
“The panel would have to chalk out measures that do not focus on a hike in diesel and LPG prices, which has been talked about and is a known prescription,” a senior finance ministry official told HT on the condition of anonymity.
“The government has several options to ensure that fiscal deficit is contained, it should be willing to implement those,” said Soumya Kanti Ghosh, director, economics & research.