The UPA government
is planning a major cost-cutting drive with an aim to cut wasteful as well as
planned expenditure in order to attain a lower FY14 fiscal deficit of 4.5
percent of GDP against the targeted 4.8 percent.In last years budget, Finance
Minister P Chidambaram had outlined the government would clock a deficit of Rs
5.42 trillion for the financial year, or 4.8 percent of GDP.
But overspending, coupled with
lower-than-expected tax revenues, meant the government had already reached a
shortfall of Rs 5.1 trillion (or 94 percent of the target) in the first eight
months of the financial year.Sources have told CNBC-TV18 that full-year deficit
is likely to come in lower as the government would make up for the shortfall in
tax revenues with non-tax revenue sources. Part of the shortfall would be made
up with a string of divestments the government has recently initiated. Stake
sales in Hindustan Zinc , Balco and Indian Oil , and special dividends by Coal
India , SAIL and NMDC , among other public companies, have either been declared
or are under process.
The government has also cut its planned
expenditure by Rs 1.10 lakh crore in FY14, or 20 percent of the total outlay,
according to CNBC-TV18. Borrowing for the full year is now expected to come at
Rs 5.64 lakh crore instead of the Rs 5.79 lakh crore declared in the budget.
And today's Economic Times says that the finance
ministry also wants state-run banks to curtail wasteful expenditure. Banks will
not only have to stop footing the bill for alcohol (board members will need to
pay for their drinks themselves) but also for the travel or accommodation of
people accompanying board members.Already PSU banks are reeling under piles of
debt. In June 2013, state-run banks had total gross non-performing assets of Rs
1.92 lakh crore, up from Rs 1.64 lakh crore in March.
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