Email
Print
ShareFor the first time ever, the Central government's total spending is projected to cross the magic barrier of Rs 10 lakh crore to reach a mind-boggling Rs 10,20,338 crore, representing an increase of 36% over what was budgeted for the previous fiscal.
However, in relation to the revised figure for the last year, the incremental growth works out to be much smaller at 13.3%.
What should engenderconcern is that, much of this expenditure is debt-financed and that of the total, the share earmarked for creation of assets is minuscule -- 10.8% in 2008-09 and budgeted at 12.1%.
The increase in expenditure over the years is undoubtedly rapid, considering the fact that it was just over Rs 3 lakh crore in 2000-01.
But this is understandable in view of the expanding economy, expanding role of the government in the economy and expanding government itself, besides the generally galloping inflation.
Besides, the inability of the Centre to rein in unproductive outgo or to prioritise its expenditure heads has made this spending spree not only possible but even inevitable.
If the quality of expenditure leaves much to be desired, the pattern of its financing is no less disturbing.
In the current fiscal, revenue receipts and non-debt capital receipts will meet only around 61%. In 2008-09, real resources mop-up accounted for a relatively larger share of 63.8%. Thus, the Budget envisages a greater reliance on fiscal deficit during 2009-10.
In his Budget speech, the finance minister dwelt at some length on the incremental growth rate of plan and non-plan expenditure and he preferred to make a comparison between what was budgeted for the ongoing year and the budgeted figure for the preceding fiscal.
On this basis, while total spending is set to go up by 36 %, the spurt in non-plan and plan spending is envisaged at 37 % and 34 % respectively.
In reality, however, the extent of the rise may be much smaller when the comparison is based on the revised data for 2008-09- only 13.3 % for overall expenditure, 12.6 % for non-plan and 14.9 % for plan. This is because, in that year, the deviation of the revised numbers from what was originally budgeted turned out to be much higher.
In other words, if another spending stimulus was the intention, it is not actually reflected in the Budget for 2009-10, even though an all-time high in spending may materialise.
Although the Budget refers to plan and non-plan spending, a more appropriate approach would be to study the break up between capital and revenue expenditure.
This is because, even the so-called plan spending has a large revenue component. Based on the classification of revenue and capital heads, it is evident that the latter has fared poorly in the matter of allocation of funds.
In 1990-91, more than a fourth of the total expenditure was account of asset build-up; by 2000-01, this share had dropped to under 15 % and stood as low as 12.1 % in 2008-09.
With the fillip to the gross budgetary support to the plan to the tune of Rs.40000 crore, this share is expected to go up to 12.1 % in the current year. Even if this is achieved, capital outlay as a percentage of the total would be less than half of what it was in 1991-92.
The financing pattern of expenditure is equally worrisome in that the dependence on borrowings is more than ever. Thus, fiscal deficit is budgeted to meet 39.3 % of the total spending in 2009-10, up from 36.2 % in the preceding year and 32.6 % in 1991-92.
