Gross budgetary support in FY13 may grow by 18.14%

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While the finance ministry is trying hard to meet expectations of all sectors in the upcoming Budget, gross budgetary support to government schemes will see an allocation hike of 18.14% at Rs 5.21 lakh crore, reports CNBC-TV18's Rituparna Bhuyan.

This will also include allocations for bank recap for public sector banks and a revival package for Air India.

The first question that arises is how the government is going to fund such a large increase in GBS? The answer lies in two critical assumptions of the government. The first assumption is on the revenue front and the second is on the subsidy.

On the revenue front the government believes that there will be a buoyant increase in tax collections which means that there will be some kind of increase in at least indirect tax rates in the Budget. Also the disinvestment agenda will be given a very hard push.

On the second set of assumptions (subsidy), the government believes that it will save a lot of money on at least the fertiliser subsidy scheme. The internal calculations show that government will save at least Rs 10000 crore because of implementation of the new fertilizer subsidy scheme, but oil subsidies will remain a worry.

Government policy do not rule out multiple hikes in petrol and diesel rates in FY13. It is learnt that the GBS scheme will take into account the bank recap allocations expected around Rs 20000 crore plus allocation for public sector banks recap and allocations for Air India revival plan is also on the cards which will form part of the GBS allocations.

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