The government is seeking Parliament approval for gross additional expenditure of about Rs 4.36 lakh crore (trillion) and net additional spending of over Rs 3.25 lakh crore. The bulk of the spending is towards fertiliser and food subsidy.
According to the first batch of supplementary demands for grants tabled in the Lok Sabha by minister of state for finance Pankaj Chaudhary, approval is being sought for net cash outgo aggregating over Rs 3.25 lakh crore. Gross additional expenditure, matched by savings of ministries/departments or by enhanced receipts stood at over Rs 1.10 lakh crore.
The additional spending includes over Rs 1.09 lakh crore towards fertiliser subsidy and Rs 80,348.25 crore for meeting the expenditure of the food and consumer affairs ministry mainly towards giving free foodgrains to the poor.
Icra chief economist Aditi Nayar said: “The total net cash outgo, which is somewhat smaller than our expectations, is dominated by fertiliser subsidy, food subsidy, payments to the OMCs (oil marketing companies) for domestic LPG operations and funds towards the job scheme.”
“Additionally, capex has been augmented by around Rs 31,000 crore, which should ensure the capex target is achieved. 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 per cent of GDP,” she said.
Rajani Sinha, chief economist, CareEdge, said the fiscal deficit will now cross the budget estimate. “Taking into account the additional expenditure outgo and expectations of higher than budgeted tax revenue collection, we estimate the Centre’s fiscal deficit to exceed the budget target by around Rs 0.8-1 lakh crore in FY23.”
In fertiliser, the Centre has sought Rs 23,122.23 crore more for indigenous and imported P&K subsidy and Rs 86,166.72 crore for imported and indigenous urea subsidy.
The government had budgeted for Rs 1.05 lakh crore subsidy in this fiscal on fertilisers. India, which imports up to 40 per cent of the 50 million tonnes of fertiliser it needs annually, has been hit hard by a jump in prices this year after supplies were disrupted by Russia’s invasion of Ukraine, which is a major fertiliser producer.
The demand for food subsidy is seen on account of the extension of the Pradhan Mantri Garib Kalyan Anna Yojana. The government extended the five-kilogram-a-month foodgrain scheme until December on the back of healthy GST collections and direct tax collections.
Approval has also been sought for expenditure of the ministry of petroleum and natural gas towards the payments of LPG subsidies to oil marketing companies and LPG connections to the poor under the Pradhan Mantri Ujjwala Yojana, among others totalling Rs 29,944 crore.
The additional expenditure also includes Rs 13,669 crore and Rs 12,000 crore for meeting the spending requirements of telecom and railways ministries, besides about Rs 10,000 crore for the transfer to GST compensation fund for giving compensation to states and UTs.
Approval has been sought for Rs 46,000 crore additional expenditure by the rural development ministry, which includes Rs 4,920 crore for the Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREGA).
Meanwhile, chief economic advisor V. Anantha Nageswaran on Friday said private sector needs to increase capital expenditure as it may not be healthy for the public sector to continue to invest at the same pace as it did in the last decade.
