According to finance ministry officials, the subsidy bill for the current fiscal is not likely to exceed the budget estimates mainly because of low import prices and softened inflation rate.

Although there would be appropriations from one account to the other, by and large the bill would be within the overall target. The government has provided for Rs 19,883 crore in the budget for subsidy and in the revised estimates it is likely to be around that level.

The major subsidies cover food, sugar, and fertiliser. The outgo for the major subsidies would anyway be up by about Rs 1,500 crore as compared to the revised estimates for the last fiscal.

However, the fact that the governmenthas managed to contain the subsidy in the current fiscal provides only cold comfort when viewed against the conscious decision of the finance ministry to cut non-Plan expenditure by 10 per cent. Taking into account the mid-year corrective step, the subsidy bill for the current year ought to be around Rs 18,000 crore - less than the revised estimate of Rs 18,366 crore for 1997-98.

Since the figure will not be lower, the next fiscal may not be as good as the current one from the point of view of subsidy management, sources indicated. Low inflation rate would give added strength to the finance minister to push through some of the unpopular yet necessary measures.

The expenditure management exercise for the next fiscal would draw on the experience of the decision of the finance ministry to cut 10 per cent non-Plan expenditure which was moderately successful, though not in case of subsidies.

The officials point out that though it was an unpopular expenditure control exercise, it has yielded some worthwhileresults. Though not officially termed as the mid-term correction exercise, the finance ministry wrote to the different ministries to observe utmost financial prudence.

The 10 per cent cut in non-plan expenditure should have resulted in a saving of about Rs 20,000 crore. However, the finance ministry officials knew the limitations of the exercise and were fully aware that it was impossible to impose 10 per cent cut uniformly. The non-Plan expenditure, which was estimated at Rs 1,95,925 crore during 1998-99, covers areas like interest payment, defence, salaries of government employees, subsidies, establishment expenditure and various other expenses.

The bulk of non-Plan expenditure like interest, wages and defence, are committed and cannot be curtailed. The effort in the next fiscal will be to compress subsidy bill and reduce establishment cost as part of the broad expenditure management exercise.