instructed to manage within the allocated funds".
EYE ON ELECTIONS
Fearing defeat in state elections likely due in November and in national polls due by May next year, the government has balked at cutting its hefty oil subsidy bill and recently introduced a costly food subsidy scheme targetted at the rural poor who are the ruling Congress party's core voters.
Last month, it deferred a plan to raise diesel prices by close to 10 percent in one go that could have sharply cut the oil subsidy burden, estimated at over 900 billion rupees for the current fiscal year - nearly 40 per cent more than budgeted.
The government also introduced subsidised grain to 67 per cent of the 1.21 billion population and has set in motion a substantial revision in salaries and pensions for almost 8 million government workers.
To try to keep the budget on target, P Chidambaram has already introduced small-bore austerity measures, such as a ban on new hiring and meetings in five star hotels, plus travel restrictions. The finance ministry estimates the measures will save about 100 billion rupees this fiscal year.
P Chidambaram has still to identify the specific areas to be hit if new cuts are agreed, the officials said, adding they expected the picture to become clearer by the end of this month when they hope to have revised revenue estimates.
While government officials insist that tax collection targets will be met, analysts say the effects of slower economic growth will automatically hit revenues.
The budget had banked on tax collections this fiscal year growing nearly 19 percent. In the first five months of the fiscal year between April and August, net tax receipts stood at 20.8 percent of the full-year target. By August last year, receipts were stronger, standing at 22.7 percent of the target.
However, tax revenues tend to pick up from the second half of the fiscal year, finance ministry officials say.
There are also doubts as to whether the government can raise the 540 billion rupees it had planned from share sales in the current fiscal year when turmoil in financial markets has already derailed plans for stake