Subsidy bill may exceed estimates by Rs1 lakh crore: Pranab
08 Dec 2011
In what may come as a shock even to Indian economists, finance minister Pranab Mukherjee on Wednesday admitted that the government's subsidy bill could overshoot estimates by as much as Rs1,00,000 crore, or about 70 per cent.
Mukherjee told Parliament that that fuel, fertiliser and food subsidies will rise further in the remaining months of this fiscal, putting a strain on the government's finances. As a result, the fiscal deficit could widen to 5.7 per cent, from the earlier projected 5.1 per cent.
''There is no carpet under which you can sweep under-recoveries of Rs1.32 lakh crore. Fertiliser subsidy is going to be Rs90,000 crore against the projected Rs40,000 crore. Similarly, food subsidy will also increase. And net increment will not be less than about Rs80,000 crore. It maybe even Rs1 lakh crore,'' said the minister.
The additional Rs1 lakh crore will push the annual subsidy bill to close to Rs2.5 lakh crore. That would be a whopping 40 per cent above the Rs1.43 lakh crore that had been set aside in the budget for fuel, fertiliser and food subsidy, which has already been exhausted.
The sustained weakness in the global economy is not helping India's cause, Mukherjee said, adding that the uncertainty on growth is making planning difficult.
''The budget projection of GDP was not unrealistic. But the euro zone went unpredicted; so too North America. I can say I was shortsighted. But then FMs the world over failed,'' Mukherjee said in self-exculpation.
