Page 446 - ES 2020-21_Volume-1-2 [28-01-21]
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Fiscal Developments 73
subsidies. In 2016, approximately 66 Centrally Sponsored Schemes were rationalized into 28
Umbrella Schemes. The cycle of these Schemes was also made co-terminus with the Finance
Commission cycle, to ensure more clarity on flow of resources available to both the Union and
the State Governments over a Finance Commission cycle.
2.34 The expenditure on major subsidies which was pegged at 1.0 per cent of GDP in 2020-21
BE, accounted for a moderate growth of 2.1 per cent over 2019-20 PA. In 2019-20 PA, there
was an increase of 13.9 per cent in the subsidy bill of the Government, as the food, fertilizer and
petroleum subsidies grew by 7.3 per cent, 14.9 per cent and 34.5 per cent respectively, relative
to 2018-19.
2.35 With a low tax to GDP ratio, Central Government faces the challenge of providing
sufficient funds for investment and infrastructure expansion while staying within the bounds
of fiscal prudence. Therefore, improving the composition and quality of expenditure assumes
significance. Over the past few years, the quality of expenditure measured in terms of the share
of capital expenditure in total expenditure has on an average sustained at a level (Figure 13). It
is estimated to increase roughly by a percentage point in 2020-21 BE over 2019-20 PA which
accounts for an expected growth of 22.4 per cent in capital expenditure over 2019-20 PA. The
major sectors apart from defence services, that account for bulk of capital expenditure allocation
in 2020-21 BE include industry and minerals, construction of roads and bridges, communication
services, and space technology.
Figure 13: Trends in components of Total Expenditure
15 89
14 88
Percent 13 87 Percent
86
12
11 85
10 84
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
PA BE
Capital Expenditure/Total Expenditure (%)
Revenue Expenditure/ Total Expenditure (%) (RHS)
Source: Union Budget Documents & CGA
BE: Budget Estimate, PA: Provisional Actuals
2.36 Apart from budgetary spending, Extra Budgetary Resources (EBR) have also been
mobilized to finance infrastructure investment since 2016-17. EBRs are those financial liabilities
that are raised by public sector undertakings for which repayment of entire principal and interest
is done from the Central Government Budget. Government has raised EBRs of ` 1.35 lakh
crore during the period from 2016-17 to 2019-20. It proposes to raise EBR of ` 49,500 crore in
2020-21 BE which is 0.22 per cent of GDP.