Mid-year review: Govt capital expenditure to rise 25% to Rs 3.9 lakh cr by FY20

New Delhi: The government’s capital expenditure will rise by 25 percent to Rs 3.9 lakh crore by 2019-20, with defence outlay alone jumping 22 percent, according to the Mid-Year Review tabled in Parliament on Thursday. It has budgeted for Rs 3,09,801 crore as capital expenditure during the current fiscal which will rise to Rs 3,41,000 crore in the next one, and to Rs 3,90,000 crore in 2019-20, it said. Defence, which accounts for about 30 percent of the government’s capital outlay, will see the spending rise from Rs 91,580 crore in the current fiscal to Rs 1,01,137 crore in the next one and Rs 1,11,706 crore in 2019-20. Together with revenue expenditure, government’s total spending is projected to rise from Rs 21.46 lakh crore in 2017-18 to Rs 23.4 lakh crore in the next financial year and Rs 25.95 lakh crore in 2019-20. [caption id=“attachment_3914991” align=“alignleft” width=“380”]  PTI.[/caption] While outgo on fertiliser subsidy is projected to be flat at Rs 70,000 crore between the current fiscal and 2019-20, the food subsidy bill will rise to Rs 1.75 lakh crore in 2018-19 and Rs 2 lakh crore in the following fiscal. Food subsidy bill in current fiscal is pegged at Rs 1.45 lakh crore. Petroleum subsidy would drop to Rs 18,000 crore in 2018-19 from Rs 25,000 crore in current fiscal and to Rs 10,000 crore in 2019-20. Petrol and diesel prices have been decontrolled and subsidy outgo on petrol is restricted to LPG and kerosene. “In continuation of the efforts of the government to rationalise subsidises, the Government has decided to increase the cost of LPG cylinders by Rs 4 per month. The ultimate aim of the Government is to eliminate the subsidy on LPG cylinders by end March 2018,” the review said. After successful implementation of paying subsidies directly into bank accounts of LPG users, the government is now focused on reducing kerosene subsidies. Introduction of the Goods and Services Tax (GST) from 1 July this year as also the increased surveillance post demonetisation would expand the tax base from in next two fiscal years, the review said. The tax-GDP ratio will increase by 30 basis points in 2018-19 and 2019-20. “The tax-GDP ratios are projected to be 11.6 percent in 2018-19 and 11.9 percent in 2019-20,” it said. While the revenue deficit target of 2 percent of GDP will be met in current fiscal, the deficit would be 1.9 percent in the next. “However the elimination of effective revenue deficit will have to be re-calibrated,” it said. The review projected aggregate revenue expenditure in defence, excluding pensions, to grow by about 10.4 percent in 2018-19 and 8.5 percent in 2019-20. “This pushes the defence revenue expenditure to Rs 201,511 crore and Rs 218,629 crore in 2018-19 and 2019-20 respectively,” it said.