The Centre’s expenditure is set to rise by 26 per cent in 2009 over last year, a well-known think tank said in its monthly review here.
The government’s expenditure is 26 per cent more than the actual expenditure in FY08. The 26 per cent increase is the highest ever since 1980-81, the Centre for Monitoring Indian Economy (CMIE) said.
Following a spurt in subsidies in fertiliser and food, the government’s budgeted expenditure for 2008-09 stood revised upwards at Rs 8,98,976 crore from Rs 7,50,884 crore budgeted in February 2008.
The two supplementary demands for grants of Rs 1,05,612 crore and Rs 42,480 crore approved by Parliament in October and December, respectively, pushed up the government expenditure in fiscal 2009. The revised expenditure is 19.7 per cent higher than the Budget estimates.
As a percentage of GDP, expenditure for FY 2009 works out to 16.5 per cent. This ratio is the highest in the recent five years. Earlier in FY 03 and FY 04, this ratio had reached 16.8 per cent and 17.1 per cent, respectively, the CMIE said.
Factors that led to the spike in Central government’s expenditure include a spurt in subsidy on fertiliser and food, implementation of the Sixth Pay Commission recommendations, debt-waiver scheme for farmers and the stimulus packages for the economy, the CMIE said.
There is a spurt in subsidies which is placed at Rs 1,23,464 crore during 2008-09. Out of total subsidy of Rs 1,23,464 crore, Rs 67,037 crore was budget estimates and Rs 56,427 crore was envisaged in the two supplementary demands for grants that was approved by the Parliament, the CMIE said.
Out of the additional subsidies, Rs 44,863 crore is for fertiliser and Rs 11,564 crore for food including edible oils.
Increase in fertiliser subsidy reflects higher raw material costs, and rise in food subsidy was on account of the hike in minimum support prices and higher procurement of foodgrain in the current financial year, the CMIE said.
As of November 2008, foodgrain stocks stood higher at 35.1 million tonnes, compared with 19.7-million tonnes a year ago.
In addition to Rs 75,849-crore cash payments, fertiliser companies would be paid Rs 21,656 crore through special government securities towards fertiliser subsidy.
In December 2008, the Central government already issued special bonds worth Rs 14,000 crore to fertiliser companies.
In the remaining three months, the government may not issue special bonds for the remaining amount of Rs 7,656 crore towards fertilier subsidies as raw material prices have seen a sharp fall since September 2008, the CMIE said.
