The underachievement of targets is a manifestation of an attempt by the ruling dispensation to artificially suppress the BE in order to show a better picture of the fiscal deficit.
The Union government may end up spending Rs 50,000 crore more than the budget estimate (BE) on the three major subsidies — fertiliser, food and cooking gas — during the current financial year. The maximum slippage of Rs 25,000 crore would be in fertiliser subsidy where the revised estimate (RE) is likely to be Rs 2 lakh crore against a BE of Rs 1.75 lakh crore. Food subsidy will increase by Rs 15,000 crore with the RE rising to Rs 2.12 lakh crore against the BE of Rs 1.97 lakh crore. Cooking gas subsidy will overshoot the BE of Rs 2,250 crore by Rs 10,000 crore.
The underachievement of targets is a manifestation of an attempt by the ruling dispensation to artificially suppress the BE in order to show a better picture of the fiscal deficit in line with the pattern seen in the past. The jump in fertiliser subsidies shows the government’s inability to correctly assess likely movement in the global prices of fertilisers and fertiliser raw materials (FRMs) during the course of the year. Besides, the unwillingness of the political brass to increase the maximum retail price (MRP) of fertilisers, even by a small amount, makes sure that the actual subsidy payout always remains higher.