Govt to frontload rural spending

To pep up rural demand ahead of the general elections, the National Democratic Alliance government has decided to spend up to 60 per cent of the allocation for rural development for 2004-05 on the three schemes -- Swarnajayanti Gram Swarozgar Yojana, Sampoorna Grameen Rozgar Yojana and Indira Awaas Yojana -- within the first four months of the year.

The rural development ministry has received Parliament's approval to spend a sum of Rs 1,510.93 crore (Rs 15.11 billion) on the three schemes, as part of the vote-on-account last week.

The pattern of clubbing the spending on a scheme within the first quarter will, however, violate the cash management system for central ministries, launched by Finance Minister Jaswant Singh in Budget 2003-04.

Under the system, six major ministries, including rural development are to ensure that they spend their Budget allocation at the rate of 25 per cent for each quarter, instead of bunching them at the end of the year. In the present case, the bunching will take place in the first four months of the financial year.

The expenses on the three schemes will be on the revenue account, which largely comprises of salaries and immediate requirements for the schemes. The sum spent will have a multiplier effect on the rural economy.

The Centre expects to spend about 40 per cent of its total expenditure for the next financial year as per the vote-on-account approved by Parliament.

This works out to Rs 3,21,069.93 crore (Rs 3,210.70 billion) out of the total expenditure of Rs 7,92,721.08 crore (Rs 7,927.21 billion), for the full financial year. Of this, Rs 50,364.27 crore (Rs 503.64 billion) is meant towards higher repayment of the finance ministry's Ways and Means advances taken from the Reserve Bank of India, besides market loans in the April to July period.

According to the Bill, the provisions represent one third of the estimated gross expenditure of the government for 2004-05, "except in cases where the expenditure is not uniformly spread over the year, and larger provision is required to meet the likely expenditure during April to July, 2004".

The other major heads for which the finance ministry has received Parliament's approval are -- Rs 36.67 crore (Rs 366.7 million) for the divestment ministry for meeting expenditure on the public issue of Oil and Natural Gas Corporation and Gail India and the first allocation of Rs 68.84 crore (Rs 688.4 million) for the USO Fund of the telecommunications department.

Among the other major heads of expenditure for which Singh has tabled the demands for these four months are capital outlay for defence (Rs 7,491 crore), the ministry of road transport and highways (Rs 2,410.98 crore), and the department of atomic energy (Rs 1,253. 65 crore).

Another Rs 1,691 crore (Rs 16.91 billion) has been allocated towards payment of subsidy on indigenous fertilisers and final payment for concessional sale of decontrolled fertilisers.