How Government Plans To Fund Rs 2.5-Lakh-Crore Shortfall For Infrastructure-Cess Backed Schemes
Shortfall for schemes backed by road and infrastructure cess rises to Rs 2.5 lakh crore after excise duty cut.
The government's decision last week to reduce excise duty on petrol and diesel by cutting the road and infrastructure cess will increase the shortfall for schemes supported through this levy to as much as Rs 2.5 lakh crore.
The Consolidated Fund of the central government will bear the shortfall in revenues from the road and infrastructure cess for FY23 caused due to the fuel price cuts, according to a senior government official.
In the current financial year, the Finance Ministry has budgeted Rs 1.38 lakh crore to come from the cess. The expected utilisation from this fund was budgeted at Rs 2.95 lakh crore, a shortfall of Rs 1.56 lakh crore to be borne by the Consolidated Fund of India.
Consolidated Fund of India comprises non-tax revenues receipts and all loans raised by the government domestically using treasury bills or from foreign governments and multi-lateral agencies. Any expenditure or withdrawal from this fund has to be authorised by parliament.
The reduction of road and infrastructure cess to bring down fuel prices will add an additional Rs 1 lakh to the shortfall. The Consolidated Fund of India will now have to provide over Rs 2.5 lakh crore to fund various schemes.
According to Finance Ministry and a document reviewed by BQ Prime, the cess collected contributes to various central governmental initiatives:
Optical Fibre Cable-based Network for Defence Services
Pradhan Mantri Swasthya Suraksha Yojana
Jal Jeewan Mission and SBM Sagarmala
Reform-Linked Incentive scheme
Border road works
Railway safety/construction
Investment in the NHAI, road works, maintenance of national highways.
Pradhan Mantri Gram Sadak Yojana
Pradhan Mantri Aawas Yojana.
The shortfall was borne by the Consolidated Fund of India in FY22, and that is expected to continue into FY23, the official cited earlier said.
This will add revenue pressure on the government. Along with the latest excise duty cut, the government has spent over Rs 2.9 lakh crore on inflation relief measures.
The impact on the fiscal deficit is yet to be seen, the official cited earlier said. The borrowing calendar, however, remains the same for now, said the official.