Budget 2015-16: Higher Plan expenditure seen on low fuel subsidy, says IDFC

Moneycontrol Bureau

The outlook for Plan expenditure is much better in FY16 due to lower fuel subsidy outgo and higher excise revenues, according to brokerage house IDFC.

IDFC expects subsidy outgo to decrease to Rs 21,420 crore in FY16 from Rs 24,200 crore in FY15 because of the fall in crude price.

It expects food subsidy increase to Rs 12,500 crore from Rs 11,500 crore in FY15, and fertilizer subsidy to decrease to Rs 55,000 crore from Rs 77,000 crore on the back of lower international prices. Excerpts from the IDFC pre-Budget note

“Given higher subsidies in the past, non-Plan spends have been higher than Plan expenditure. Given muted subsidy payouts expected now, overall non-Plan expenditure should increase by just 4.4%.

Meanwhile, Plan expenditure, buoyed by higher tax revenues (13% in FY16E), would increase by 16%.

The increase in Plan expenditure will be utilized on government schemes such as Clean India (Swachh Bharat), Skill India (education), Digital India, housing (Housing for All), urbanization (100 smart cities), roads and railways.

Higher allocation will also be seen for water, sanitation and renewable energy. A mix of expenditure reforms (lower subsidies) and higher tax revenues imply fiscal deficit will be 3.6% of GDP.”