The UPA government’s flagship aam aadmi plank might just be torpedoed – thanks to a finance ministry move to cut social sector funding in a bid to control the fiscal deficit.
Given the short time before the 2014 Lok Sabha polls, it has also had the social sector ministries up in arms — a reaction the finance ministry insists is more emotional than rational.
The ministry’s concerns are valid. In the first five months of this fiscal year, the Centre has reached 74.6% of the fiscal target — excess of government’s spending over its revenues. Now, without some solid steps, the government would not be able to keep spending in check.
The finance ministry, therefore, has initiated moves to cut funding to education, health and rural development projects — worth `1.61 lakh crore — by 20-30% of the plan allocation. The aim is to keep fiscal target within 4.8% of the GDP.
The Planning Commission has already expressed its dissent with the proposal. Rural Development minister Jairam Ramesh has sought Prime Minister Manmohan Singh’s intervention. The HRD and health ministries have also raised the red flag.
The cuts would hit the rural development ministry’s Mahatma Gandhi National Rural Employment Guarantee Scheme, National Rural Livelihood Mission and Pradhan Mantri Gramin Sadak Yojana. The HRD ministry’s flagship programmes — the Sarva Shiksha Abhiyan and Madhyamik Siksha Abhiyan —would suffer too. And some of the health ministry schemes would be curtailed as well.
The finance ministry says the proposed cuts have been based on the ability of the ministries to spend money.
“If a department has used only 20-25% of the allocation in the first six months, how can it be expected to spend entire amount in remaining period?” said a senior finance ministry. The cuts are also aimed at checking the trend of disbursing most of the public money in the last two months of the fiscal year, which usually brings in poor results.