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No cut in govt's Q1 spending even as revenues dip 48%

Dipak Mondal     July 31, 2020

Despite poor revenue collection so far in the current financial year, the government is not going slow on spending. Data released by the government shows in the first quarter of the 2020-21, the government spending rose 13 per to Rs 8.16 lakh crore compared to Rs 7.2 lakh crore in the same period last year. This is despite the fact that revenue collected by the government in the first quarter (Rs 1.5 lakh crore) is just 52 per cent of the revenue collected last year.

The areas which have seen significant jump in terms of spending this year include rural development, agriculture, highway and road transport and labour and employment.

The ministry of rural development has spent Rs 87,611 crore in the April-June quarter this year which is 2.5 times the spending in the corresponding period last year. Spending under the Mahatma Gandhi National Rural Guarantee Scheme (MNREGS) falls under the ministry of rural development. It is to be mentioned here that the government has increased the allocation to MNREGS by Rs 40,000 crore under the special fiscal package announced by the government.

The ministry of agriculture has spent Rs 37,090 crore in the first quarter of the current financial year compared to Rs 21,357 crore in the previous year. Ministry of road transport and highways has seen spending in the first quarter increase 34 times to Rs 19,200 crore compared to Rs 560 crore in the previous year.

Transfers to state, which fall under the ministry of finance, have also seen a jump of Rs 20,000 crore in the first quarter from Rs 32,500 crore in 2019-20 to Rs 52,800 in 2020-21. The Centre transfers 42 per cent funds to states from its tax revenue pool.

Meanwhile, tax collection in the first quarter of the current financial year continues to be worryingly low. In the first three months of the year, tax collection was Rs 1.34 lakh crore, 47 per cent lower than Rs 2.51 lakh crore in the corresponding period last year.

The fiscal deficit at Rs 6.62 lakh crore is already 83 per cent of the budget estimate of Rs 7.96 lakh crore. The government has already factored in a larger fiscal deficit this year as it has increased borrowing for the current year from Rs 7.8 lakh crore to Rs 12 lakh crore.

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