Running On Empty

The finance minister's candid admission on the growing subsidy bill and the serious challenges to bring the economy back on the path of fiscal consolidation is timely. But what is worrisome is the unexpectedly large size of the budget overruns. According to numbers presented to Parliament, high global oil prices will increase the under-recoveries of the oil marketing companies to Rs 1,32,000 crore in the current year, while the fertiliser subsidy will almost double to Rs 90,000 crore. The total subsidy bill of the central government will exceed estimates byRs 1,00,000 crore, or a whopping 70% of previous estimates. This will reduce the amount of government funds available for new investments - especially infrastructure investments so essential for pushing growth. 

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