The central government has managed to keep its expenses in check despite multiple rounds of stimulus packages announced to tackle the Covid-19 situation as total expenditure in the first seven months of the current financial year (April-October 2020) registered a 0.4% increase over the last year.
So far, the government has spent Rs 16.64 lakh crore in the first seven months of the financial year compared to Rs 16.55 lakh crore during the same period last year. Till October, the government spent 54.6% of the budgeted target of Rs 30.42 lakh crore.
It has been able to keep a check on the expenses by reallocating assets to more needy sectors like rural development, health and agriculture sectors, while drastically cutting expenses on education, petroleum subsidy and food and public distribution. It has also spent less on capital expenditure (money spent on the creation of infrastructure and other assets) vis-a-vis last year. So far, the government has spent only Rs 1.97 lakh crore on capital expenditure compared to Rs 2 lakh crore in the previous year till October.
The government has also managed to keep its revenue expenditures (money spent on salaries, subsidies, payment of pensions, etc) in check despite the pandemic. The government's revenue expenditure saw a negligible increase of 0.7% to Rs 14.64 lakh crore in the April-October period compared to Rs 14.54 lakh crore during the same period last year.
This is mainly owing to a 46.4% drop in petroleum subsidy bill compared to last year, which saved the government Rs 17,000 crore. A sharp drop in petroleum prices has helped the government not only in making large savings but also collect higher taxes by increasing excise duty on petrol and diesel.
Another Rs 22,500 crore was saved on food and public distribution and Rs 15,500 crore on education.
Expenditure on rural development saw a sharp jump of 75% from Rs 77,229 crore to Rs 1.35 lakh crore, an increase of almost Rs 58,000 crore during the period. Overall, the total subsidies at Rs 1.85 lakh crore have seen lower spending by 18% till October compared to last year.
Most of it has gone into rural employment generation scheme MGNREGA, where the government has increased the allocation from the budgeted Rs 61,500 crore to Rs 1.11 lakh crore. Spending on the agriculture sector increased 17% or by 10,000 crore vis-a-vis last financial year. Expenditure on health and family welfare increased by 22% in April-October 2020 compared to the same period last year.
Experts think the government might be able to keep its full-year expenditure lower than the budgeted target of Rs 30.4 lakh crore.
According to Aditi Nayar, principal economist, ICRA, the government's total expenditure could be around Rs 30.2 lakh crore in 2020-21, mildly lower than the budgeted level, despite the financial support measures that have been announced so far.