Budget 2012-13: There may be under budgeting of expenditure in Budget: Bibek Debroy

cIn an interview with ET Now, Bibek Debroy, consulting editor, ET Now, gives his views on the Budget. Excerpts:


ET Now: What did you read from the announcement on the reduction of EPFO rates? It is also a good move since that would reduce the government’s borrowing costs. Is it an indicator of what lies ahead in the budget today?

Bibek Debroy: No, I do not think one should read too much into that because one should look at the fiscal deficit number. But the issue in the fiscal deficit number is what is happening on the non-tax revenue part of it. I am not that concerned about the denominator, the nominal GDP growth rate because I suspect that the real growth rate will be overestimated, but simultaneously the inflation will be underestimated. So I would look at the non-tax revenue, but more importantly to make this credible I would look at whether there is a clear signal and targets for going back to the FRBM Act.

ET Now: What about disinvestment? Do you expect the Finance Minister first will commit to a big fat number like 40,000 crores for this year, even fail to meet that target and we could see a repeat of ONGC?

Bibek Debroy: Yes, but I do not think it is just disinvestment. He will have some figures on 2G, 4G, whatever it is. Disinvestment proper I do not think we are going to see something like 40,000 crores, but quickly to come back to the point that was being made earlier, I think this year we are going to end not with 6%, but something like 5.6%. For the next financial year, we will have something like 5%.

But let me bring in a bigger thing and that’s not fertiliser and fuel, but food subsidies and the point I want to make is that he will deliberately under budget for the food subsidies. Part of the problem last year was that the deficit numbers went wrong because of the subsequent supplementary grants and something like that is going to happen this year also. There will be under budgeting of expenditure.

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