Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Money / The govt’s report card for FY10
BackBack

The govt’s report card for FY10

The govt’s report card for FY10

Premium


So what has been the government’s performance on the budget of 2009-10? A comparison of the budgeted numbers of 2009-10 with the revised estimates offers answers to these questions.

Also See Revenue Deficit a Worry (Graphics)

The fiscal deficit target was at 6.8% of the gross domestic product (GDP) and the actual estimate has come in at 6.7%. But notice that the fiscal deficit is lower than the budgeted number as a percentage of GDP, but higher in rupee terms. It suggests two different numbers for GDP have been taken, one for the budget estimates and another for the revised estimates. The lower fiscal deficit as a percentage of GDP is, therefore, a statistical mirage.

Also, the revenue deficit, which was budgeted at 4.8% of GDP, is now estimated at 5.3%. Revenue receipts, both tax and non-tax, have fallen short of the target by 6%. Revenue expenditure, on the other hand, overshot the budget, albeit by a modest 1%. That’s why the revenue deficit has increased. The fiscal deficit, however, was lower than the revenue deficit. The chart shows the reason why.

Capital expenditure has been lower by a good 6.8% of the amount targeted, keeping alive the tradition of pruning the deficit by curtailing capital expenditure instead of revenue. Receipts from disinvestment, which weren’t budgeted, led to higher capital receipts.

But given the global crisis, it wouldn’t be fair to blame the government for lower receipts. But the government can if it chooses to have substantial control over expenditure. Expenditure on subsidies has overshot the budgeted amount by 18%, primarily because of oil subsidies. The amount spent on pensions exceeded the target by 21%.

Take a look at expenditures for some of the social sectors. Spending on rural development was on target, as was expenditure on drinking water, while the budgets for women and child development, and urban development were exceeded. But there were shortfalls in spending on school education and literacy, higher education, housing and urban poverty alleviation and health and family welfare. Among other critical sectors, while the budget for the textile sector was exceeded, targets for road transport and highways and for power were not reached. For power, the shortfall in spending was 28%.

The revised estimates, of course, will be further revised. For 2008-09, for example, the budget estimate of total capital expenditure was Rs92,765 crore, the revised estimate was Rs97,507 crore and the actual expenditure was Rs90,158 crore. The government says these actuals, too, are not actual actuals but provisional. In short, the government’s record has been patchy. In 2009-10, it assumed too high buoyancy in taxes, too high a level of capital expenditure and too low a level of subsidies.

Graphics by Yogesh Kumar / Mint

Write to us at marktomarket@livemint.com

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 03 Mar 2010, 12:30 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App