The Rural Development Ministry is counting on Finance Minister P Chidambaram’s announcement in the Budget that the Government would provide additional funds, if needed, to implement the job scheme. The ministry is also confident that the scheme will not face fund shortage as it is derived from an Act of Parliament, for which the Government will, in any case, make provisions as and when required during the next fiscal.

While the Government may consider the rising expenditure a success of its programme, it is likely to ring alarm bells for its fiscal consolidation plan.

In fact, the Economic Advisory Council to the Prime Minister, headed by former RBI governor C Rangarajan, in its Economic Outlook for 2007-08 submitted to Manmohan Singh last July, had attributed the increasing revenue deficit to expenditure on social sector schemes, including the NREGS.

“The revenue deficit has persisted in spite of impressive increase in Central tax revenues, and this is mainly due to continued increase in expenditure on various flagship schemes such as the Sarva Shiksha Abhiyan, National Employment Guarantee Scheme, National Rural Health Mission, Prime Minister’s Gram Sadak Yojana, Indira Awas Yojana, National Urban Renewal Mission and various other poverty alleviation and social development programmes in rural and urban areas,” the Economic Outlook had said.