Finance minister asks ministries to keep check on spends to curb deficit

NEWDELHI: Facing pressure in meeting deficit targets, the expenditure department ofthe finance ministry has asked other departments and ministries to ensure thatno funds are released till the agency concerned provides a utilizationcertificate for money provided earlier.“The message is clear: Why should someone earn interest on funds borrowed by the government at 8%,” a finance ministry official said. Sources said the message was delivered by expenditure secretary Sumit Bose to financial advisors. In fact, officials are citing this as the reason for postponing sanctioning of funds for projects and schemes that were not included in the Budget.Thefinance ministry is, however, trying every trick in the book — fromincreasing resource mobilization from government services to maximizingcollection of tax arrears — to ensure that the deficit target for thecurrent financial year is met.But considering that finance minister Pranab Mukherjee had only budgeted for 3% rise in spending this year, he has little headroom available especially due to the bloating subsidy bill. A depreciating rupee is more than making up for expectations of the government being comfortable on the oil subsidy bill. To provide a clean set of accounts, at least at the time of the Budget, Mukherjee had assumed oil prices at around $80 a barrel, while the commodity is now trading at over $100, upsetting his calculations.To add to his woes, the government has been forced tomaintain the regulated price regime for diesel, which will push up subsidies,and he has been unable to push ahead with the proposal to cut subsidies oncooking gas even for the middle class. Higher energy prices would also take atoll on fertilizer subsidy bill, which many say, like oil, has beenunder-provided.To add to the pressure, the government is staring atthe prospect of missing the disinvestment target given the adverse marketconditions. Against a target of Rs 40,000 crore, the government is expected tomop up just around Rs 1,000 crore during the first half of the financial yeargiven that the ONGC public issue has been postponed for themoment.There seems to be a problem on the non-tax revenue front toowith revenue from auction of more spectrum in a limbo. In a bid to avoid anycontroversy, the telecom department is seen to be going slow on the exercisethat is budgeted to fetch the government close to Rs 25,000crore.What is adding to the pressure is the prospect of revenuetargets, especially on indirect taxes front, being missed due to the economicslowdown. During April-July, net tax receipts grew 17.2%, which is just a tadlower than the 17.9% target for the current financial year.