Finance Secretary Sushma Nath told Indivjal Dhasmana and Vrishti Beniwal that fiscal deficit could have been reduced to 4.8 per cent of GDP, but that would have meant more pressure next financial year on the fiscal deficit front. Edited excerpts:
What are the reasons for making only paltry increase in expenditure for next financial year?
Expenditure in certain sectors is going up but as a percentage of GDP, it is coming down. Subsidies is one place where there is scope for compression. You want subsidies to reach targeted beneficiaries but it is being siphoned off. That is why we are talking about cash transfers for kerosene, LPG and fertilisers.
On non-plan side, our expenditure is 10.9 per cent and on plan side, it is 18.3 per cent increase. In terms of net borrowings, we are flat.
Where do you expect to cut down on expenditure next year?
The question is how are resources being implemented. We are not getting required outcome, so we have to look afresh. One reform is to track expenditure. Today when we make a release from central government, it is counted as expenditure when actually it is not. We have been asking states to have state funds. So if one district doesn’t need funds, it can be transferred to another district.
Fiscal deficit is coming down to 5.1 per cent in Revised Estimates. But in terms of absolute numbers, it is going up. Is it all because of revised GDP numbers?
One is growth in GDP which is giving us the advantage and the second is 3G. We are not squandering away all the money; we are using it for consolidation. This is the reason fiscal deficit target has been reduced to 4.6 per cent in 2011-12.
On revenue deficit, you are nowhere near the Finance Commission’s target. Is this concept of effective revenue deficit a numerical jugglery?
No. For many programmes being done through state governments or local bodies, money is being given as grant. Going by definition, grant-in-aid should be shown as revenue expenditure.
Do you think finance ministry could have done better with regard to reforms and fiscal stimulus if inflation was not a concern?
A lot of impetus is on tackling inflation. Commodity and food prices are going to go up, so we have to rely on domestic production. As far as reforms, stability is being given to tax regime. Process reengineering has been done to reduce taxpayers’ interface with the revenue department.
Crude prices are going up but the Budget does not have anything on duty restructuring.
We had rolled back the duty when crude was high and restored it when it came down. It is not that some new duty was introduced.
Disinvestment targets will not be met this year.
That’s because it is (more money) not required in the current situation.
