The government may cut its expenditure for the first time in three years in the current financial year. For the current financial year starting from April 1, the total expenditure of the government may come down drastically. 39.45 lakh crore was estimated to be spent in the budget for 2022-23.
The government is keen to rein in the fiscal deficit as it is well above the historical levels of 4 percent to 5 percent. During the first year of the Kovid-19 pandemic in 2020-21, it had reached a record of 9.3 percent.
The government's fiscal deficit during April-August reached a record Rs 5.40 lakh crore, which is 32.6 percent compared to the budget estimate of Rs 16.6 lakh crore. It was Rs 4.68 lakh crore in the same period a year ago, which was 31.1% of the budget estimate at that time.
Decision on area-wise deduction till December
The government is not going to deviate from the fiscal deficit target. It is not known which sectors are likely to be affected by the spending cuts, as discussions on the revised budget estimates are underway and a final decision will be taken by the end of December.
There may be an increase in revenue up to two lakh crores
Tax cuts on fuel, aimed at mitigating the impact of rising global energy prices, could reduce revenue by more than one lakh crore. Still, the revenue may increase from 1.5 lakh crores to 2 lakh crores. The increase in revenue will still not be enough to cover the anticipated additional expenses. Because the government will have to provide additional food and fertilizer subsidy of Rs 1.5 lakh crore to Rs 1.8 lakh crore.
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