dna exclusive: P Chidambaram wants to have a Rs48,000-cr last laugh

Finance minister P Chidambaram and his key North Block officials are mulling an accounting sleight of hand.

If things fall apart for the UPA come 2014, the plan is to saddle whichever party that forms the government next year with damages totalling Rs48,000 crore – the amount North Block will have to carry forward if it wants to come out with clean fiscal numbers this year.

This could also be perceived as an attempt to generate resources for the implementation of UPA’s flagship scheme — the Food Security Act — which, of late, has been facing challenges on the funding front.

A senior finance ministry official told dna: “We are considering carrying forward a payable of up to Rs48,000 crore to oil marketing companies from the current year to the next financial year.”

The Bharatiya Janata Party (BJP) — which after its splendid showings in Delhi, Rajasthan, Madhya Pradesh and Chhattisgarh hopes to get the numbers to form the next government at the Centre — says left with a burden like that, it will become a huge liability for any party or formation that will come to power to move forward.

BJP leader and ex-chairman of the Goods and Service Tax panel of state finance ministers, Sushil Kumar Modi, told dna: “This will become a difficult financial liability for those who will form the next government. Anyway, the UPA has been following a flawed policy of curtailing plan expenditure.

Last year, too, the central government cut at least Rs80,000 crore and welfare schemes suffered.”

At the core of the issue lies the fact that under recoveries of the oil marketing companies have gone way beyond what was factored in at the time of budget making in February this year.

Consider this! For 2013-14, the finance ministry is looking at an under recovery on LPG and kerosene to the tune of Rs1,40,000 crore, which is double that of the Rs61,000 crore subsidy estimated in 2013-14 budget. The government used Rs45,000 crore from this corpus to pay last year’s dues, and the balance Rs16,000 crore was exhausted in the first two quarters of this fiscal.

Explaining the maths, the official said, “If you consider the increased requirement of Rs1,40,000 crore for this year, there will be an upstream contribution (payment by oil production companies) of Rs67,000 crore.

“Of the remaining Rs73,000 crore, we have already paid Rs16,000 crore in the first two quarters and made an additional provision of Rs9,000 crore. This still leaves us with an amount of about Rs48,000 crore, which most likely will get carried forward to the next financial year.”

On the receipts front, the government is already in a sticky position. In the April-November period, gross tax receipts of Rs3.7 lakh crore was received by the government. Even though this was 13% higher than the previous year’s receipts during the same period, it was lower than the projected 18% growth. The government is now betting on advance tax receipts and voluntary compliance on the service tax to bail it out.

Subtractions and additions
1 For 2013-14, Fin Min is looking at an under recovery on LPG and kerosene of Rs1,40,000 crore, which is double that of the Rs61,000 crore subsidy estimated in 2013-14 budget. The government used Rs45,000 crore of this to pay last year’s dues, and the balance.

2 Explaining the maths, a North Block official involved in the exercise, said, “If you consider the increased requirement of Rs1,40,000 crore for this year, there will be an upstream contribution (payment by oil production companies) of Rs67,000 crore.”

3 Of the remaining Rs73,000 crore, we have already paid Rs16,000 crore in the first two quarters and made an additional provision of Rs9,000 crore. This still leaves us with an amount of about Rs48,000 crore, which most likely will get carried forward to the next fiscal.