NEW DELHI: In the backdrop of poor revenue collection, and to stick to the fiscal deficit target, the government has asked the ministries to be prudent in their spending and focus on what was urgent and essential first.
“Revenue collection is a matter of concern. While divestment is expected to be better than the target, ministries need to be more prudent in spending.
The department is not curtailing expenditure, but the ministries have been asked to be more prudent in expenditure, given the current scenario. The urgent and important expenditure needs priority and projects which are not urgent can be put on hold,” a senior official in the ministry of finance said.
In the first half of the financial year, 53.4 per cent of the Budget Estimates was spent by various ministries and departments.
Experts have already warned that this will impact the funding of many public welfare schemes, especially due to the recent slowdown.
“Despite the finance minister saying in September that the government has no plans to cut back on expenditure, we believe that weak revenue collection will eventually constrain the government’s ability to maintain its spending targets,” credit rating agency FITCH said in a recent report.
It also revised down its expenditure growth forecast for FY20 to 12.1 per cent (from 13.7 per cent previously), below the government’s 13.4 per cent projection.
The Centre’s overall expenditure, 15.4 per cent of the GDP in 2014-15, dropped to 12.2 per cent in 2018-19.
“They will have to cut expenditure again just as they did last year unless they are able to realise a lot of money by privatisation,” said DK Joshi, chief economist, Crisil.