The Centre on Friday opened up the purse-strings for pro-poor programmes such as the rural job scheme but the allocation stills falls short of the revised estimates of the last fiscal even as the supplementary demand for grants of Rs 3.73 lakh crore threatens to increase the fiscal deficit for the fiscal.

In the demand for extra funds for this fiscal, the Modi government said it wanted to spend Rs 22,039 crore extra on the rural job scheme, taking the total expenditure under the programme to Rs 95,039 crore, but still way below the allocation of Rs 111,500 crore made under the scheme according to the revised estimates for 2020-21.

Besides, the supplementary demand for grants may increase the fiscal deficit, because the government may fall short of divestment targets for the fiscal, according to Icra chief economist Aditi Nayar.

Minister of state for finance Pankaj Chaudhary on Friday tabled the second batch of supplementary demands for grants in the Lok Sabha envisaging a net cash outgo of over Rs 2.99 lakh crore and Rs 74,517 crore extra expenditure to be matched by savings by different ministries.

Finance minister Nirmala Sitharaman later tabled the supplementary demands for grants for 2021-22 in the Rajya Sabha.

The extra spending would include Rs 58,430 crore by way of additional fertiliser subsidy, Rs 53,123 crore towards payment of pending export incentives and Rs 22,039 crore to the rural development ministry for the transfer to the National Rural Employment Guarantee Fund and Rs 62,000 crore for infusion into the company that holds the residual assets and liabilities of Air India after its privatisation.

The civil aviation ministry will get Rs 62,057 crore for equity infusion in Air India Assets Holding Company (AIAHL) to repay past government guaranteed borrowing and past dues and liabilities of Air India.

Under the supplementary demands for grants, an additional Rs 2,628 crore would be given towards loans and advances to Air India for the recoup of advances from Contingency Fund of India.

Besides, the department of food and public distribution would be given an additional Rs 49,805 crore for meeting expenditure towards various schemes of food storage and warehousing.

About Rs 2,400 crore would be given to the department of commerce for meeting expenditure towards subsidies under the “Interest Equalisation Scheme”, and investment under the Export Credit Guarantee Corporation (ECGC) scheme.

The 2021-22 Budget had projected the government's total expenditure at Rs 34.8 lakh crore.

But this is expected to overshoot considering the two batches of supplementary demands for grants presented by the government so far.

The government in August received Parliament approval for net additional spending of Rs 23,675 crore in the first batch of supplementary demands for grants.

Interestingly, about a sum of Rs 10 lakh crore goes to the states, which reduces in the central portion of the expenditure budget to only Rs 24 lakh crore, which would now increase by another Rs 3 lakh crore.

“As hopes of a substantial portion of the ambitious FY2022 disinvestment target being realised fade, and we move closer to eventual rate hikes from the monetary policy committee of the RBI, G-sec yields are likely to witness an inevitable hardening,” Nayar said.

The defence ministry would get Rs 5,000 crore under the second supplementary demands, while the home ministry will get Rs 4,000 crore.

The 2021-22 Budget had projected the government’s total expenditure at Rs 34.83 lakh crore. But this is expected to overshoot considering the two batches of supplementary demands for grants presented by the government so far.