Health, education, child development, provision of drinking water and bringing more land under irrigation are going to be the focus areas for the government during the coming fiscal.
The Union Budget 2007-08 proposed an increase of Rs98,884 crore in total expenditure over the last year, of which a substantial chunk will go to programmes related to the social sector.
Of this, total expenditure on capital account, which finances new projects, is projected to grow by a whopping 64% to Rs1.22 lakh crore in 2007-08.
Finance minister P. Chidambaram proposed to enhance allocation on flagship programmes such as Sarva Shiksha Abhiyan, Mid-Day Meal Scheme, Rural Employment Guarantee Scheme, Integrated Child Development Programme and Jawaharlal Nehru National Urban Renewable Mission (JNNURM). While Bharat Nirman, a rural infrastructure project, is proposed to get an additional allocation of 31.6%, the allocation for education has been upped by 35%.
As part of plan expenditure, irrigation projects and rural infrastructure will comprise a major chunk of central assistance for states and Union territories (UT). The increased allocation will go to programmes such as the Accelerated Irrigation Benefit Scheme, Backward Region Grant Fund and JNNURM, besides laying down new roads and building bridges. Two new schemes—Brihat Mumbai Storm Water Drain Project and Commonwealth Youth Games in Pune—will also be part of the planned expenditure.
According to M. Govinda Rao, director, National Institute of Public Finance and Policy, budgetary allocation on the social sector would have to be followed up by proper implementation by the states.
Rao is more upbeat about increase in overall capital expenditure. “What is exciting is that rise in capital expenditure is in line with the growth story. This will see many infrastructure projects coming up,” he said.
The non-Plan expenditure will rise due to mounting subsidies, enhanced capital expenditure on defence and increased outgo on interest payments. Food subsidy is projected to go up by Rs1,492 crore.
Increased dependence on debt to finance government spending has resulted in a 7% rise in interest burden. So have provisions made to oil marketing companies and Food Corporation of India on special securities issued to them. Last year the growth on interest payments was 7.5%
A Rs38,508 crore increase in capital outlay is largely on account of provision for Reserve Bank of India’s acquisition of stake in State Bank of India.
Proposed grants to states and UTs rose by 5.2% over 2006-07 mostly on account of provisions made under the Twelfth Finance Commission and compensation to states for the proposed phase out of Central sales tax. Expenditure on pension is set to rise by 5.7% in the coming fiscal.