Government Seeks Parliament Nod For Rs 3.26 Lakh Crore Additional Spending

Subsidies towards food, fertiliser and fuel have swollen the central government's expenditure bill.

<div class="paragraphs"><p>Indian five hundred rupee banknotes arranged for photograph. (Photo: Vijay Sartape/BQ Prime)</p></div>
Indian five hundred rupee banknotes arranged for photograph. (Photo: Vijay Sartape/BQ Prime)

The central government tabled its first supplementary demand for grants for the current fiscal in parliament today, seeking additional outgos for food and fertilisers, among other items.

The first batch of supplementary demand for grants for FY23 includes 75 grants and six appropriations.

The government is seeking the Parliament's nod for gross additional expenditure of Rs 4.36 lakh crore. Of this, the proposals involving net cash outgo aggregate to Rs 3.26 lakh crore.

The savings by ministries, through enhanced receipts/recoveries, aggregates to Rs 1.10 lakh crore.

According to ICRA, the total net cash outgo under the SDG is less than expectations. It is dominated by fertiliser subsidy, food subsidy, payments to the oil marketing companies for domestic LPG operations, and funds towards NRGEGA.

"Additionally, capex has been augmented by around Rs 31,000 crore, which should help to ensure that the capex target is achieved," said Aditi Nayar, chief economist at ICRA. "With savings likely under other heads, we do not see the supplementary demands resulting in a meaningful breach of the fiscal deficit target of 6.4% of GDP."

Additionally, in its demand document, the government said that "token provision of Rs 159 lakh is being sought, one lakh for each item of expenditure, for enabling re-appropriation of savings in cases involving New Service or New Instrument of Service".

Key Outgos

In line with geopolitical tensions and distress to global supply chains, subsidies towards food, fertilizer and fuel have swollen the government's expenditure bill.

Additional fund outlays sought by the government are as follows:

  • Fertiliser subsidy: Rs 1.09 lakh crore

  • Additional allocation due to extension of Pradhan Mantri Garib Kalyan Anna Yojana: Rs 60,110 crore.

  • Allocation towards Pradhan Mantri Awas Yojana-Rural: Rs 28,422 crore.

  • Payment to OMCs under domestic LPG operations: Rs 22,000 crore.

  • Department of Telecommunications seeks an extra Rs 13,668 crore for BSNL operations.

  • Additional funds for Mahatma Gandhi National Rural Employment Guarantee Scheme, which falls under the National Employment Guarantee Fund, will involve cash outgo of Rs 16,400 crore.

  • Additional fund transfer and transfer of compensation cess to the GST Compensation Fund would entail a total of Rs 9,951.42 crore.

The break-up of the fertiliser subsidy is as follows:

  • Rs 23,122.23 crore for payment of indigenous and imported P&K subsidy.

  • Rs 86,166.72 crore for imported and indigenous urea subsidy.

The government had announced budgeted fertiliser subsidy at Rs 1.05 lakh crore in the Budget.

However, with geopolitical tensions escalating in Ukraine, it announced an additional fertiliser subsidy of Rs 1.10 lakh crore, beyond the initial outlay.

In the first SDG, the burgeoning costs of fertiliser subsidy gets highlighted as the Russia-Ukraine crisis continues.

Demand for food subsidy is seen on account of extension of the Pradhan Mantri Garib Kalyan Anna Yojana. The government extended the five-kilogram-a-month food scheme until December 2022 on the back of healthy GST and direct tax revenues.

According to Rajani Sinha, chief economist at Care Edge, the additional outgo on food subsidy under the PMGKAY is lower than expectations.

"The positive aspect to note is that apart from additional outgo on account of subsidy bills, there is additional outgo for employment generation in the form of the National Employment Guarantee Fund and capital asset creation under MGNREGS," Sinha said.

The central government's flagship housing-for-all programme—the Pradhan Mantri Awas Yojana–Gramin—which is due in 2024, received an increasing outlay amid rising demand for funds from states, according to Business Standard.

Among key outgo is an allocation to the Petroleum Ministry at Rs 24,943.68 crore. It includes the one-time grant to OMCs of Rs 22,000 crore, a Rs 7,210 crore sum for providing LPG connections to poor households under the Pradhan Mantri Ujjwala Yojana and two smaller outgos.