Revenue woes: budget allocations of central ministries may be pruned

  • Timsy Jaipuria, Hindustan Times, New Delhi
  • Updated: Feb 20, 2015 13:59 IST

Poor revenue collections by the government is likely to weigh heavily on the budget allocations of all central ministries.

The finance ministry has told ministries that the upcoming budget would only accommodate 30% to 40% of their demands, and if need be, the finance ministry will allocate fresh funds, several senior government officials across ministries told HT. The new funds would be allocated only after the second quarter of 2014-15, they added.

“The finance ministry has turned down our demand of Rs. 3,000 crore, a large part of which is part of the 12th Five-Year Plan. They have said they would allocate only 30% of the demand,” a senior official said on the condition of anonymity.

Similarly, another official said his ministry’s demand for increased allocation has also been turned down. The finance ministry usually holds review meetings with ministries to assess their demands and this time, till now, discussions have not taken place. “So, we know that our demand will be cut down heavily. Even our minister has said so in internal meetings,” the official added.

Another official from an infrastructure ministry said: “The interest of private companies is dying in our sector and to keep growth intact we have requested for an increased allocation, but the finance ministry has told us to look at different alternate methods as it would not be able to allocate the desired amount.”

Officials also added that the pruning of allocations would happen across ministries, be it for social sector schemes, infrastructurerelated allocations or research and development of various projects.

“The budget would also curtail the capital infusion demand for revival of sick PSUs,” another official said on the condition of anonymity.

However, the finance ministry has assured them that if the economy picks up as expected after September 2015, fresh funds allocations would be made, the officials added.

“The finance ministry is betting big on the revival of the economy by the middle of the second quarter of next fiscal and has told ministers and senior officials that a lot of their demands would be catered to later on,” two officials quoted earlier said.

The move comes in wake of slipping revenues of the government.

In the budget, the government had targeted gross direct tax revenues of Rs. 7.36 lakh crore, but has managed to collect Rs. 5,78,715 crore as gross direct taxes till January, representing 70% of the target.

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