Not just explicit cuts, tweaked subsidy math also to help FM
Unlike the more obvious attempts at expenditure control, these steps have a bit of covertness about them for their technical nature and hence, are likely to escape public criticism. Nevertheless, these will potentially help the minister in his fiscal consolidation plan. No less so in the next fiscal, given Chidambaram’s plan to reduce fiscal deficit to 4.8% of the gross domestic product (GDP) even as most forecasts peg growth below 6%.
Most importantly, questions have been raised by the finance ministry over the manner of estimating oil and fertiliser subsidy amounts by the administrative ministries concerned and alternative models entailing considerable potential savings are being flagged. Further, capital receipts from PSU disinvestment are being proposed to be used only for productive, asset-creating spending — a move that could help reduce wasteful utilisation of these resources for revenue expenses in the guise of social-sector spending and generate some incremental growth out of these with the resultant acceleration of revenue streams. A little more flexibility in employing the usual way of deferring a chunk of the subsidy payments on fuel and fertiliser due in a given year to the subsequent one is also on cards, without fluttering the industries concerned too much.
The finance ministry, as FE has reported, is insisting on
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