Expenditure to rise only 3.3% in 2011-12

01 Mar 2011 Evaluate

With the government opting for fiscal consolidation, Finance Minister Pranab Mukherjee has projected a mere 3.3 per cent increase in the total government spending, at Rs 12,57,728.83 crore, during 2011-12. The revised estimates for 2010-11 show that the government spending, at Rs 12,16,575.24 crore, increased 19 per cent this year, over that in 2009-10. The tight control in spending will result in lower capital expenditure next year.

The projected decline in the government’s non-Plan expenditure, by about Rs 5,370 crore to Rs 8,16,182 crore in 2011-12, is a healthy sign for the economy. The estimated non-Plan expenditure constitutes 65 per cent of the total government spending, compared to 67 per cent in 2010-11. This is primarily because the government expects redemptions to be less next year. Non-Plan expenditure is a term used for both development and non-development expenditure and includes salaries, interest payment and spending on assets created through the previous Plan spending.

Plan expenditure, which broadly includes spending on assets and is perceived to provide a push to the economic growth, is estimated to be Rs 4,41,546.75 crore next year, an increase of about 12 per cent over the revised estimates of 2010-11. At Rs 3,95,024 crore, Plan spending during the current year is, however, 30 per cent more than that in 2009-10.

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