Fiscal woes in mind, PC plans 40% fund slash

Spending on the social sector is expected to come down, with the finance ministry informing central ministries that their allocation may be cut by 40% this financial year to effect fiscal consolidation.

Updated on: Nov 8, 2012, 01:59:59 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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Spending on the social sector is expected to come down, with the finance ministry informing central ministries that their allocation may be cut by 40% this financial year to effect fiscal consolidation.

The direction has come ahead of the finance ministry's plan to seek Parliament’s approval for supplementary grants of ministries in the winter session, starting November 22.

A few days ago, finance minister P Chidambaram had rolled out a five-year plan to reduce India's fiscal deficit from 5.3% in the current fiscal to 3% by 2017.

A low fiscal deficit would improve investor sentiment and help the economy grow at a faster pace. On the flip side, it could result in less availability of funds for the social sector if the tax revenue does not grow.

Chidambaram’s ministry started working on the mandate to control rising fiscal deficit by telling other ministries that fund allocation for the remaining part of the current financial year would depend on spending over the first six months of the current fiscal. “The target is to reduce the spending by around Rs. 1 lakh crore from the original budget estimate to keep the fiscal deficit at the present level,” a senior official said.

It could also result in the slashing of the Department of Posts budget for the current financial year to Rs. 300 crore, from the previously-approved Rs. 800 crore. Similarly, the Information and Broadcasting ministry's budget of Rs. 905 crore may be halved, and the budgets of other departments — including the Heavy Industries and Science and Technology department — may undergo a major cut.

The Planning Commission, which decides the plan size, may have to do away with the Rs. 14,000 crore allocated to it by former finance minister Pranab Mukherjee for bank capitalisation. The finance ministry currently maintains that no fund allocation is required under this head. “Efforts towards achieving fiscal consolidation would result in cuts on public spending in the present revenue stream,” said a senior plan panel official.

Though Parliament had approved a plan size of Rs. 1,000 crore in Budget 2012, government sources said that ministries were not in a position to spend the amount. Also, the finance ministry has made it clear that ministries will not be allowed to indulge in last-minute spending, which results in wasteful expenditure.

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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