Planning a detailed road map for the exit from stimulus packages implemented by the government, strict implementation of cost-cutting measures, and initiatives to boost tax revenues would be the key themes of Budget 2010-11.
Finance minister Pranab Mukherjee has convened a meeting of financial advisors of various ministries and departments on Thursday to take stock of the current situation and discuss measures for balancing growth with inflation by gradually withdrawing tax concessions and pump-priming measures initiated to counter the slowdown.
According to a senior government official, the finance minister has called for an accurate estimate of the savings achieved by each department on account of the measures initiated by the government. Financial advisors of 28 ministries and departments have also been asked to give an assessment of the unspent balances from the allocations made for the April-September period, the official added.
The total spending envisaged by the government in 2008-09 had seen a substantial increase both on an account of Plan expenditure as well as non-Plan expenditure. The governments non-Plan spending was pegged at Rs 6,17,996 crore as against Rs 5,07,498 crore estimated in Budget 2008-09.
Similarly, even the Plan expenditure was higher at Rs 2,82,957 crore as against an estimate of Rs 2,43,386 crore. The fiscal deficit, which is the difference between the governments total expenditure and total receipts less borrowings, for the current financial year is pegged at 6.8% of the GDP.
Fiscal deficit in the April-September 2009 period stood at Rs 1,82,290 crore, which is 45.5% of the budget estimate for the current fiscal.
The government had taken several measures to stimulate the economy such as doling out tax concessions in the form of a reduction in cenvat and service tax and additional spending. It had slashed cenvat from 16% to 8% in the last financial year while reducing service tax by 2% to 10%.
The finance minister wants to take stock of the expenditure incurred and projected spending for the remaining months of 2009-10, and these issues are likely to figure in Thursdays deliberations, the official said. An estimate of the number of automobiles purchased by government departments after the ban on such purchases was lifted would also be analysed, he added.
The meeting with financial advisors kicks off the budget-making process for 2010-11. The FM wants to ensure that growth momentum is not affected, especially in view of the projected dent in farm output due to deficient monsoons in several parts of the country.
At the same time, he wants inflation to be kept under control so that the common man is not affected.
Apart from consultations in Delhi, Mr Mukherjee is expected to hold regional conclaves in metros like Mumbai, Chennai, Bangalore and Kolkata to seek inputs for the 2010-11 Budget. The traditional meetings with India Inc, farm sector representatives, trade unions and bankers will happen by the middle of December, he said.
The 2010-11 budget-making exercise would also focus on boosting revenues, especially excise. Due to slowdown and the concessions granted to counter it, revenue collections are far below the governments expectations. Boosting revenue collections weighs high on the governments agenda as it plans to return on the path of fiscal consolidation.