The finance minister may have to slice at least Rs 20000 crore ($3.2 billion) from government spending to prevent a budget blow-out, which could threaten to send the country's credit rating into "junk" status, two ministry officials said.
If he goes ahead with cuts, the minister would likely focus on areas of discretionary spending but keep programmes, such as food subsidies, in place as state and national elections near, these officials said
Chidambaram, who last year oversaw cuts worth over Rs 1 trillion, is aiming to prevent the budget for the fiscal year to March 2014 from stretching beyond a deficit target of 4.8 per cent of GDP.
"With oil subsidies up by about Rs 30000 crore, the government may have to cut expenditure by around Rs 20000 crore in addition to usual savings of around Rs 30000 crore at the end of the year," said a senior finance ministry official.
Fearing defeat in state elections likely due in November and in national polls due by May next year, government has balked at cutting its hefty oil subsidy bill and recently introduced a costly food subsidy scheme targetted at the rural poor who are the ruling Congress party's core voters
Last month, it deferred a plan to raise diesel prices by close to 10 per cent in one go that could have sharply cut the oil subsidy burden, estimated at over Rs 90000 crore for the current fiscal year - nearly 40 per cent more than budgeted.
The government also introduced subsidised grain to 67 per cent of the 1.21 billion population and has set in motion a substantial revision in salaries and pensions for almost 8 million government workers.
>>> NIFTY <<<
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Chinese Non-Manufacturing PMI data, Rupee appreciation helped Nifty to gain strength today. Shut down of US govt and Fall in Dollar helped Rupee to appreciate today also. Now facing resistance at 5922 and 5974. Lets See.
>>> LT <<<
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LT - facing resistance at 830. If unable to cross may see sharp sell off, else need to cross above the upper channel for any upmove. lets See.
>>> BATA INDIA <<<
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Bata India - If unable cross Resistance may see Sell Off. Lets See.
