New Delhi, March 9: Finance minister Palaniappan Chidambaram’s picture perfect Budget 2008-09 which distributes largesse to farmers and tax sops to the middle class and yet reports a low fiscal deficit may well turn out to be an accountant’s nightmare by the end of March next year.

Big-ticket expenses, which include a promised pay hike for civil servants, an as yet off-budget writeoff of loans for farmers (part of which may be paid out of tax revenues), understated fertiliser subsidies and the cost of a general election that may be held this year, could wreck the budgetary estimates.

The budget for 2008-09 has projected a fiscal deficit of 2.5 per cent of the country’s gross domestic product. However, the budget hasn’t provided for any of these expenditures — and this has worried both politicians and economists.

“The off-budget spending, which has not been taken into account, can inflate the deficit figure considerably,” said S.P. Gupta, former member of the Planning Commission.

The Sixth Pay Commission is due to submit its report by the end of March. Once the recommendations are accepted, the salaries of 3.1 million servants will go up and the government will have to pay arrears from January 2006.

The cost of this payout, top revenue officials say, could well translate to about 0.4 per cent of the GDP, or a little more than Rs 20,000 crore.

Officials admit that no money has been provided for this payout as yet but argue that revenue buoyancy on the back of a booming economy will help provide for the extra money.

Former finance minister Yashwant Sinha has described this as “irresponsible”. The government made a provision of Rs 4,000 crore in the railway budget to pay for the salary hikes and arrears, which must have been cleared by the finance ministry.

CPM leader Nilotpal Basu agreed that the off-budget items should have been taken into account in the budget.

“We believe there is no need to be fiscal fundamentalists and try and hide expenses just to meet fiscal prudence goals,” Basu said.

Economists point out that the pay commission is not the only worry. The huge farm loan writeoff, which is likely to be paid for by tax and non-tax revenues, according to statements from the Congress-led government, is another source of concern.

Even if part of the Rs 60,000-crore loan writeoff is reflected in the budget, it will mean an extra item worth several thousands of crores, which can help skew the deficit figures further.

Similarly, the fertiliser subsidy budgeted for 2008-09 is Rs 30,986 crore against this year’s actual subsidy of over Rs 48,000 crore.

The real subsidy for the year ahead (2008-09) is estimated by both the department of fertiliser and the Fertiliser Association of India to be closer to Rs 50,000 crore.

The general election, if it takes place this year, represents an expenditure of at least Rs 2,000 crore.

The total estimated value of these off-budget expenses could well translate into nearly one per cent of GDP or over Rs 50,000 crore.