Union Budget: Desperate on deficit, govt to set to slash defence and welfare spending
The government had originally targeted a fiscal deficit of 5.1 percent in the current financial year, but loosened the target in October. It was 5.8 percent in 2011/12.
The impact of measures to cut bloated subsidies will mostly not be felt this fiscal year, which runs to the end of March.
"We are estimating a budget cut of 1.1 trillion rupees ($20.6 billion) as an outer limit. However, the final picture will be clear by March 15 when we have a clear idea about tax collections and the fuel subsidy bill," said a senior finance ministry official, who declined to be named.
A senior official at the defence ministry -- the world's biggest arms importer in recent years -- said a $1.9 billion cut there could delay efforts to buy howitzer guns and Javelin anti-tank missiles from the United States by at least few months.
"The Indian army would be hit hard due to budget cuts," said the official, noting that a defence deal worth more $12 billion for procuring 126 jet fighters from France's Rafale was already delayed by at least three months.
Up to $4 billion will be lost at the rural development ministry, which has the largest budget after defence, hitting spending on roads, housing, and the government's flagship rural job-guarantee programme, a senior official in the ministry said.
Top officials at the finance, transport, rural development ministries and a government body on spending said ministries were likely to get 20-30 percent less funds for assets and projects such as roads,
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