Govt may cut Plan expenditure by Rs 80,000 crore to meet fiscal target: report

Committed to contain fiscal deficit within the redline drawn by Finance Minister P Chidambaram, the government may trim planned expenditure by over Rs 80,000 crore or about 15 per cent of the budgeted amount in the current fiscal, according to a top government official.

"The revised estimates for various departments are on. There is likely to be about 15 per cent cut in overall Plan expenditure," the official told PTI on Tuesday.

The cuts in allocation to various ministries are being effected due to lower utilisation of allocated funds so far this fiscal year.

"We have evaluated the amount spent by various ministries in the seven months of the fiscal. On that basis the cuts are being effected in the revised estimates."

The government has budgeted total plan expenditure at Rs 5.55 lakh crore in the current fiscal year (FY14). Total expenditure, including non-plan, is budgeted at Rs 16.65 lakh crore.

In FY13, the Plan expenditure was reduced by over Rs 90,000 crore to Rs 4.29 lakh crore, from Rs 5.21 lakh crore estimated in budget. This helped to contain fiscal deficit at 4.9 per cent of GDP.

There has been about 18 per cent cut in the budget allocation to the Rural Development Ministry for 2013-14, according to sources.

In the revised estimates for fiscal year 2013-14, the Finance Ministry has cut the allocation to the Ministry of Rural Development and Ministry of Human Resource Development by about Rs 15,000 crore and Rs 5,000 crore, respectively.

Rural Development Minister Jairam Ramesh, sources said, has written to Prime Minister Manmohan Singh and Mr Chidambaram raising concerns about the cut the fund allocation saying it would hinder development.

The 2013-14 budget had allocated Rs 80,194 crore to the rural development ministry, which runs many of the UPA government's flagship programmes like rural job guarantee and road construction schemes.

The cuts in the allocation of funds to various ministries come as the Finance Ministry is striving hard to contain the fiscal deficit at 4.8 per cent of GDP in the current fiscal year. The fiscal deficit was at 4.9 per cent of GDP in 2012-13.

"We will do whatever it takes to contain the fiscal deficit in the current fiscal to 4.8 per cent of GDP. It is a red line, a red line which we can breach only at our peril. We will not breach that red line and we will contain the fiscal deficit," Mr Chidambaram had earlier said.

In the first six months of 2013-14, fiscal deficit has touched 76 per cent of budget estimates. In September, government came out with austerity measures putting a freeze on fresh appointments, banning holding of its conferences in 5-star hotels and barring officials from executive class air travel in a bid to check fiscal deficit from going out of control.