The Centre`s close to Rs 30 lakh crore stimulus since the March lockdown may come at the cost of reduced allocation for several centrally sponsored schemes.
As the budget mathematics for next fiscal gets finalised, the government has decided not to stretch its Covid impacted finances too much and rather maintain expenses to the budgeted levels by cutting annual plan outlays for several ministries that still have large balances in their account. The cuts have been effected in the revised estimates of outlays for various ministries.
In the process, however, allocations for the Ministries of Rural Development and Food and Public Distribution may be maintained at the FY21 budgeted levels or stretched a bit to keep adequate funds available to run stimulus measures announced under the Aatmanirbhar Bharat Abhiyan. Accordingly, stimulus schemes like PM Garib Kalyan, Anna and Rozgar (EPF support) Yojanas will get adequately funded while other schemes may get a freeze on additional funding.
Sources said, the government is looking to maintain its budget size for FY21 to roughly around estimated levels of Rs 30 lakh crore despite three rounds of stimulus. This would be important to prevent any more slippage on the fiscal deficit front that looks already enlarged and may end up the year at much higher levels of 8 per cent of GDP.
The annual allocation squeeze has been evident in revised estimates for ministries such as Tribal Affairs, Fisheries and Animal Husbandry, Social Justice, Women and Child Development, Education etc.
Several schemes being run by these ministries will get big cuts in the remaining period of the fiscal. Most of the these ministries have spent less than 50 per cent of the annual budgeted levels of expenditure till September end and sources said that this has opened the window for the government to get funds for its stimulus schemes at the cost of slow spending made in other schemes including those for social welfare schemes.
Interestingly, sources said that rural focused government may also cut annual allocation of the Agriculture Ministry by close to Rs 30,000 crore this year. This would come from savings on PM Kisan schemes and lower allocations being considered for few other schemes run by the ministry. The thinking is that several of the stimulus measures have been all announced for the rural economy that will in any case benefit the agricultural sector.
What has given hope that several ministries may spend less in the remaining period of the year is the Finance Ministry`s office memorandum dated October 29, in which it advised other ministries to keep their spending in the balance five month period of fiscal to revised estimates (RE) levels. But the ministries will have to do within the quarterly ceiling of 25 per cent of annual allocation.
What this means is that ministries that have been slow on spending on schemes in the first half of the year will not be able to cover the full allocation in the balance period.
While the ministries face an axe on spending, talks of another round of stimulus this year are gaining ground. If it actually happens, ministries may have to brace for a further expenditure squeeze.
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