The government on Monday sought Parliament approval for an additional gross expenditure of Rs 2.35 lakh crore with a net cash outgo of Rs 1.67 lakh crore. It aimed to shovel another Rs 40,000 crore into the rural jobs guarantee programme.
Officials have indicated government borrowing could be revised upwards and the bond market will have to deal with a higher supply of government paper in October-March as both the Centre and states will be strapped for cash — that will raise yields in the market.
The borrowing calendar for the second half of the fiscal will be finalised later this month.
The supplementary demands for grants said the net cash outgo will be Rs 1.66 lakh crore as the gross additional expenditure “matched by savings of the Ministries or Departments or by enhanced receipts or recoveries aggregates to Rs 68,868.33 crore”.
The government has also sought Rs 46,602.43 crore towards providing additional allocation under Post Devolution Revenue Deficit Grant to the states following the recommendations of the Fifteenth Finance Commission.
The first batch of Supplementary Demands for Grants for 2020-21 includes 54 Grants and 1 Appropriations.
“The expenditures are part of the announcements made by the government as part of Covid relief and hence these demands are formalisation of the process of incurring these expenses,” according to Madan Sabnavis, chief economist of Care Rating.
“However, the state deficit grant appears to be outside these announcements and hence become additional expenditure. This amount would be around 0.23 per cent of GDP.
“We believe that the others have already been buffered in our calculation of the fiscal deficit which we project now to be at around 8-8.5 per cent of GDP assuming marginal fall in nominal GDP from last year.”