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Saturday, March 5, 2016

Finding the ‘missing $15 billion’ in Budget 2016

A Bloomberg report on Wednesday titled “Missing: $15 billion lost somewhere
 in India’s 1,500-page budget” raised a red flag on the Indian government’s balancing
 of its books in Budget 2016. It pointed out how the global financial data provider and


We tried to locate those “missing” numbers in the same budget documents
First, we need to know how much it will cost the government to implement the
c
C recommendations. The estimate for 2016-17 by the SPC is a 24% increase in payouts
 to government employees, or Rs.102,100 crore (around $15 billion).

The first place to look for is under non-plan expenditure, and a table titled “Estimated strength
 of establishment and provision thereof”. This details how many employees are there
in 56 government departments (excluding defence) and how much the government
has budgeted to pay their salaries: an increase ofRs.65,690 crore in 2016-17. Thus,
 we have accounted for around 65% of SPC’s impact.




The second place to look for is pensions, the details of which are again provided
 under non-plan expenditure. This shows the government has budgeted for an
ncrease of Rs.37,066 crore.




Thus, the total increase in salary and pension bill in 2016-17 is Rs.102,756 crore
. However, there is one rider. The pension liabilities include increased outgo on account
 of implementing the One Rank One Pension (OROP) scheme.

Implementing OROP is estimated to cost the government Rs.7,500 crore
 Deducting this amount means the government has budgeted Rs.95,256 crore
 to meet SPC recommendations. In other words, the net shortfall in budget estimates
 on account of implementing the SPC is Rs.6,844 crore.

What’s “missing” is $1 billion and not $15 billion.

Read at: Live Mint


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