Budget 2013-14 to be most austere in yrs
senior official at the ministry said to compensate, the Railways have been asked to raise rail fares and form joint ventures with state-run infrastructure companies. The ministry needs at least $75 billion to complete ongoing projects, which are already 10 years behind schedule.
For their part, defence ministry officials are worried that Budget cuts may delay some important arms procurement plans, as well as a $6-billion project to raise a new battalion on the border with China. The ministry’s Budget was cut by $1.9 billion in 2012-13.
Chidambaram has promised to achieve a fiscal deficit of 5.3% of GDP this fiscal year and 4.8% in 2013-14, targets he calls ‘red lines’ that cannot be crossed. Late last year, some economists were predicting that the budget deficit this year could be closer to 6%.
Despite his austerity drive, Chidambaram has not lost sight of politics ahead of the looming elections. Officials say he will use the spending cuts to make headroom for the rollout of a proposed food security law. A populist bill that will expand supply of cheap grain for the poor is likely to be implemented this year at a cost of $22.27 billion to the exchequer.
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