The revised figures of Budget 2008-09 seem to be based on poor fiscal marksmanship.
If the total resource mop-up is to conform to the now projected Rs 574,438 crore, then the Centre must mobilise funds to the tune of Rs 166,174 crore during the February-March period, or at a monthly average of Rs 83,087 crore compared with the average of Rs 40.826.4 crore till January.
In view of the excise and service tax cuts, the tax revenue stands to suffer a modest setback this year, as the annual revenue foregone is reckoned at Rs 30,000 crore.
This will necessitate a further lowering of tax receipts and bloat the revenue and fiscal deficits which are already estimated at a staggering Rs 241,273 crore and Rs 326,515 crore, respectively.
The expenditure matrix also appears to be overtly optimistic, with the government labouring under a compulsion to spend more than 25% or Rs 229,874 crore during these two months alone if the revised estimate for the year --- Rs 900,953 crore --- is to be fulfilled.
But, the doubt is more on account of plan spending than in regard to non-plan heads.
In respect of the latter, with the payment of arrears to government employees and the cost of the farm loan debt waiver out of the way, some slowing down in spending is likely in the remaining period. The centrepiece of the fiscal stimulus package was the extra plan outlay of Rs 20,000 crore to revive the sagging economy.
Till January 2009, only 70.4% of the revised sum had been utilised. This implies that, in a short span of two months, this must be boosted by a staggering Rs 83,876 crore.
Plan spending has been proceeding at a monthly average rate of under Rs 20,000 crore thus far and revised estimates assume that this can be boosted to over Rs 41,000 crore in the remaining two months.
Juxtaposing the budgetary position till January 2009 and the revised estimates for 2008-09, the government anticipates a moderation in the revenue deficit to a monthly average of just Rs 16,011.5 crore in the last two months from the average of Rs 20,925 crore during the first ten months.
But, the important thing to note is that, with major non-plan spending already behind it, still there is no likelihood of the current account of the budget being in the black. In respect of the borrowing spree, the trend is expected to gather pace in these months. This is reflected in the fiscal deficit zooming to Rs 31,850 crore on an average from Rs 26,281.5 crore between April 2008 and January 2009.
The assumptions on which revised estimates are based appear suspect.
Take the tax revenue.
If the tax receipts are to amount to Rs 465,970 crore for 2008-09, then as much as Rs 136,699 crore have to be collected during February-March; of this, of the total of Rs 222,000 crore from corporation tax these months must witness a mobilisation of Rs 71,787 crore and service tax to the tune of Rs 19,410 crore if the revised estimate of Rs 65,000 crore --- since lowered --- is to be hit.
Likewise, the arithmetic of non-debt capital receipts is shaky, with the actual accrual till January being only Rs 3,449 crore, while the projection for the last two months put at Rs 8,816 crore if the final tally is to conform to Rs 12,265 crore.
In a year when plan spending was accorded the highest priority to revive the economy, the record is far from flattering.
In the first ten months, only Rs 199,081 crore out of the allocation of Rs 282,957 crore (revised estimate) has been utilised; in the event, a whopping Rs 83,876 crore has to be used if the total order of spending under plan heads does not suffer from a shortfall. Several ministries/departments have a huge backlog to use in the last two months of this fiscal year.
Coal ministry has to spend 74% of the outlay, communications and information technology 46%, north-east region 54%, earth sciences 60%, health & family welfare 36%, heavy industries & public enterprises 51%, information & broadcasting 53%, textiles 46%, space 39% and power 55%.
Among the non-plan spending categories, defence services has a backlog of 34 per cent to be used in the two-month period ending March 2009 and defence capital outlay, an unused 49%. Others suffering from the same problem include heavy industry & public enterprises, shipping & road transport, steel, textiles and petroleum & natural gas.