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FM kicks off Budget exercise

P Vaidyanathan Iyer in New Delhi

Union Finance and Company Affairs Minister Jaswant Singh will kick off the budget-making process for 2002-03 with a meeting of all financial advisers on Thursday.

The meeting with 30-odd financial advisers, representing various ministries and departments, will provide Singh an overview of their expenditure needs.

According to finance ministry sources, expenditure management will be key to keeping the fiscal deficit under check this year too.

In 2001-02, the Centre had made huge savings of almost Rs 9,500 crore (Rs 95 billion) that had helped it rein the fiscal deficit at 6 per cent of the gross domestic product. The deficit has been pegged at 5.3 per cent of the GDP in 2002-03.

The budget division in the finance ministry initiated discussions with various ministries and departments a week ago.

The revised estimate for expenditure for the current fiscal will be worked out by the end of November.

The sources said significant savings were expected in the defence sector. Efforts were also on to reorient Plan expenditure, they added.

The total expenditure for 2002-03 is estimated at Rs 4,10,309 crore (Rs 4103.09 billion), with non-Plan expenditure accounting for almost three-fourth of it.

Interest payments, defence expenditure and subsidies, the principal elements of non-Plan expenditure, offer little scope for manoeuvrability.

However, in the current fiscal, the Centre may have to face additional expenditure because of the drought.

While North Block was still awaiting an official assessment of the impact of the drought, finance ministry sources said it would not be more than Rs 5,000 crore (Rs 50 billion).

Official sources said the ministry would reorient the food-for-work programme and the Sampoorna Grameen Rozgar Yojana, which are part of the Plan expenditure to meet drought relief.

The Calamity Relief Fund and the National Calamity Contingency Fund provided direct drought assistance, they said.

The sources said of the Rs 11,000 crore (Rs 110 billion) available through those schemes, hardly 35 per cent had been utilitised till the end of September.

The money available under those schemes should be utilised before additional funds were sought for drought relief, they added.

A final picture of the expected savings would be available by December, officials said. As per the initial estimates, the government will save around Rs 5,000 crore (Rs 50 billion) on the non-Plan account.

The finance ministry also expects to make savings in the Plan expenditure by reorienting the various schemes.

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