Rural development schemes are likely to get more funds than allotted in the budget to boost consumption growth, which has fallen to a seven-year low in the villages.
The Narendra Modi-government plans to frontload additional expenditure in the rural job scheme and highway construction projects to boost demand in the rural economy.
“The ministry would seek the parliamentary nod in the supplementary demand for additional spending, which would boost the rural economy,” a finance ministry official said. The winter session of Parliament will begin on November 18.
Officials said several departments have sought additional capital expenditure worth Rs 1 lakh crore.
A part of the expenditure would be beyond the budgeted amount, requiring the finance minister to place a supplementary demand before Parliament.
The rest of the extra sum would be reallocated from other projects, while unutilised funds in schemes would be spent on the rural programmes. The officials said the goal was to stick to the fiscal deficit target of 3.3 per cent of GDP.
“In order to boost consumption, the government has very clearly said that public expenditure for infrastructure will be clearly frontloaded,” finance minister Nirmala Sitharaman had said in Washington last week. She also said the government is also committed to contain the fiscal deficit.
The government had allocated Rs 60,000 crore for the rural job scheme, which offers at least 100 days of guaranteed wage employment to every rural household.
The budget has allocated Rs 36,691 crore to the National Highways Authority of India for the current fiscal, and the NHAI plans to raise Rs 75,000 crore from the markets to fund key infrastructure projects such as the countrywide road and highway development programme, Bharatmala.
According to Nielsen India, consumption growth in rural India has fallen to a seven-year low in July-September and is lagging urban growth, a sign of stagnant rural income and prolonged agricultural distress.
The market research organisation in its quarterly report said rural consumption grew 5 per cent in the second quarter, while with urban consumption grew faster at 8 per cent,.
Former chief statistician Pronab Sen said the government should take measures to put more money into the hands of individuals through higher outlays such as the PM Kisan scheme, under which small and marginal farmers will get Rs 6,000 per year as minimum income support, and the road projects.
He said the slowdown in the rural economy was creeping into the urban areas, which is impacting overall growth.
“There is a need to frontload the government expenditure, which would boost demand. There is need to create jobs with infrastructure project, which would create demand,” he said.
PSU role
The finance ministry has asked the PSUs to undertake capital expenditure in a big way in the last two quarters of the fiscal to boost consumption. About 34 central PSUs have already spent Rs 48,077 crore till August; they have outlined plans to invest another Rs 50,159 crore till December. The PSUs would spend Rs 54,700 crore in the January-March quarter.
ONGC has a capital expenditure plan of Rs 32,921 crore for the fiscal. The PSU has spent Rs. 8,777 crore till August, which is 27 per cent of the planned capex for the year.
