Subsidy growth to be flat, easing way to deficit target

The practice of issuing bonds to oil and fertiliser firms was dispensed with in Budget 2010-11, and these firms are now being compensated for sale of goods at subsidised rates only in cash. However, it continues the custom of deferring roughly a quarter of the subsidy bill in a year (after making good the arrears) to the following year. Yet the revised estimate on any major expenditure/receipts item hasn't been so far removed from reality any time in recent history as in 2011-12. Many would find inexcusable a 30% difference between the RE and the actuals estimated soon after.

There is already a proposal to allow fertiliser companies to raise Rs 40,000 crore from banks, till the government can foot the pending subsidy bill. The expected flat growth in subsidy claims in H2 coupled with the oft-used option of deferring payment of a quarter of the year's subsidy bill to the next year would come handy for Chidambaram.

Of course, the fiscal deficit in the April-October period reached 71.6% of the budgeted level for the full year and 20% above the level in the same period last year at Rs 3,67,920 crore. This slippage is, however, attributable to a large extent to the fact that the bulk of the Rs 61,552 crore subsidy bill that Mukherjee avoided paying last year has been footed this year.

Gross tax revenue growth in 2012-13, to meet the Budget target of Rs. 10.78 lakh crore, should be 21%. Going by the pace

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