FY14 Budget likely to see expenditure freeze
Such freezing of the Budget size a cut in real terms is unprecedented in recent history at least and is contingent on expected substantial savings attributable to subsidy reforms initiated and other expenditure compression measures. Revenue buoyancy is likely to be limited in 2013-14 as well, thanks to the slowdown in economic growth.
Total expenditure during April-December grew 10.6% against the budgeted 13.1%. Thanks to some steps taken to reduce the fuel subsidies and big spending cuts in rural development, defence, HRD, railways and others, the government hopes to save R1,30,000 crore for the full year. This means the revised estimate (RE) for this fiscal will be just 3% higher than the RE of last fiscal.
While the finance ministry plan is in sync with its fiscal consolidation agenda and will send a strong signal to global credit rating agencies who had warned of a sovereign downgrade, some economists say such spending squeeze by the government might slow the economy further.
Abheek Barua, senior economist with HDFC Bank: We have seen in the last few months a major slump in government spending on account of lower utilisation of funds, but given the growth scenario and private
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