gross fuel subsidy bill could be around Rs 1.1 lakh crore next fiscal as against an estimated Rs 1.6 lakh crore this fiscal. The government’s share of next year’s oil subsidy burden would be Rs 69,800 crore as against over Rs 1 lakh crore this fiscal. If export-parity pricing is adopted for subsidy estimate (this benefit might be shared with upstream firms as well), bills would be even less. If the government opts to keep all gains from the partial deregulation of diesel price with itself, the share of upstream companies in the subsidy (in the form of giving hefty discounts in crude supplies to OMCs), would rise to 54% in 2013-14 while the absolute amount would increase relatively marginally, as per Citi Research.
Chidambaram’s bid to stem subsidy bills extends to the fertiliser sector as well. While his ministry has asked a question or two about the way the fertiliser ministry estimates the subsidy amount, the deferral of payments is said to be larger this year, while pending fertiliser subsidy bill since August is over Rs 40,000 crore.
Another initiative is regarding the use of disinvestment proceeds, a major head of non-debt capital receipts, which is expected to be close to Rs 27,000 crore this fiscal. As per the recent decision of the Cabinet Committee on Economic Affairs (CCEA), the National Investment Fund (NIF) created out of disinvestment receipts would now be used to recapitalise public sector banks and state-owned insurance firms. This marks a departure from the decision taken in 2009 at the peak of the global financial meltdown that the disinvestment proceeds would be used only for social-sector spending.
Expenditure growth during April-December this fiscal has been less than the budgeted 13.1% at 10.6%, thanks to a big squeeze on capital expenditure. (During Apri-December, capital expenditure grew just 9.6% year on year as against the budgeted rate of 30.6%). With GDP growth much less than budgeted 7.6% (5% as per latest statistics ministry estimate), revenues have been hit and April-December growth has been 13.8% against the budget projection of 22.7% (this must have improved a bit after