Expenditure cuts may be considered to balance FY23 Budget

The central government's recent decision to extend the five-kilogram-a-month free food scheme may require some expenditure curbs to balance the budget, official sources have told Business Today TV.
 
Finance Ministry officials are scheduled to begin their meetings on the upcoming union budget from October 10.

The discussions will focus on whether any expenditure rationalisation is required to offset the additional costs arising from the extension of the free food scheme, as well as the impact of rising global energy prices. 
 
"In a deficit budget, to make space for something, you must cut somewhere. This is a difficult decision, and we would need to rationalise expenditure," an official said.

"We will have to look at systematic improvements and better checks on ancillary costs. We need to adopt a uniform interest rate regime for all states. We will have to look at scheme restructuring with the help of the Department of Food and Public Distribution. While retaining the basic principles of the scheme, we will look at cutting ancillary costs," the official added. 
 
Ancillary costs refer to cash credit involved in the procurement of food grains. Since PMGYAY is a centrally funded scheme, the interest rate differs according to states as per the strength of an economy. However, sources say that if the government decides to further extend the PM Gareeb Kalyan Anna Yojana beyond December, then it may have a serious economic impact.
The government last week slashed its borrowing target by Rs 10,000 crore for FY23, indicating buoyant tax collections would help bear additional expenditure. 
 
"We have additional expenditure of close to Rs 3 lakh crore. We are confident in our tax revenues. However, non-tax revenues have been a bit troublesome this fiscal year. It is not bad, but we would like to exceed it. Disinvestment is another area where we are hopeful since we set a realistic target. We don't want to stress out an already jittery market with additional borrowing. We are hoping that small savings and provident fund receipts will help our revenue," the official added.

Also read: FY23 disinvestment receipts pegged at Rs 65,000 cr: FM in Budget

Also read: Finance ministry to kick-start budgetary exercise from October 10