FM hints at a cut in the defense Budget. P Chidambaram says he maybe forced to cut defence expenditure by Rs 10,000 crore for want of money; even the UPA's flagship schemes like NREGA may not see any hike in allocation, reports CNBC-TV18's Aakansha Sethi.
CNBC-TV18 reported earlier that there is going to be a cut of Rs 1.5 lakh crore in planned expenditure and in total planned expenditure it is about Rs 5.21 lakh crore. So, that is a 30 percent cut in planned expenditure which is huge and ministries across the board have been complaining. The finance minister has clearly said that that it cannot finance defence spending by borrowing as fiscal deficit can not be pressured.
There is nothing clear in the finance ministry at this point in time. It has to meet 5.3 percent fiscal deficit target this year. There is already a short fall of Rs 40000 crore in spectrum and Rs 60000 crore on subsidies. So, you have to balance that out and the only way to that at this point in time is cuts in expenditure because the space for revenue mobilisation is limited both in terms of taxation and in terms of other capital receipts.
Next year too, the government is looking at a 4.8 percent fiscal deficit target. So, cuts in spending are definitely going to continue next year. The government is also worried about the election and the strategy now is that unless the economy revives you are not even going to have an election victory.