Kelkar effect: FM looks to prune plan expenditure
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After Vijay Kelkar's report on fiscal consolidation painted a grim picture of government finances, finance minister P Chidambaram has called for an "immediate analysis" of the revenue position in the current fiscal — budgetary provision compared with the actual collections till September 30.
Chidambaram is also holding a meeting of financial advisors of all the government departments on Thursday to discuss ways to prune plan expenditure in the current fiscal in order to stop the fiscal deficit from going out of control. This has assumed paramount importance given the possibility of a shortfall in revenue collection.
"Finance minister had asked for immediate analysis of budgetary position with actual figures as on September 30 and projected figure for 2012-13 from the Central Board of Direct Taxes (CBDT) and Central Board of Excise and Customs (CBEC)," an official told The Indian Express. The report has already been submitted to the minister on October 1, the official added.
According to the CBEC's own assessment, the government could be staring at a shortfall of as much as Rs 33,000 crore in indirect tax collection by the end of the current fiscal going by the current trend in indirect tax collections. While the customs collection was up 11 per cent until July as against the target rate of 25 per cent, excise collection was up 29.2 per cent as against a target of 34.4 per cent.
Kelkar in his report has suggested right sizing the plan expenditure, pegged at Rs 5,21,025 crore, during the current fiscal, on the grounds of base effect.
Against the budgetary projection, the panel has suggested a plan expenditure of over Rs 4,87,674 crore, leading to a saving of over Rs 33,350 crore.
Going by the suggestion, the right-sizing of the plan expenditure itself will make up for the likely shortfall in the indirect tax collection.
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