NEW DELHI: The Centre on Thursday sought Parliament approval for net additional expenditure of Rs 44,143 crore for the current fiscal, out of gross additional spending of Rs 87,763 crore in the first batch of supplementary demand for grants.
The bulk of the additional spending is due to likely higher spending in schemes for rural telecom connectivity, PM-KISAN income support for farmers, agriculture infrastructure, fertiliser subsidy and defence services.
Gross additional expenditure will also be matched by savings of the ministries and departments or by enhanced receipts/recoveries aggregated to Rs 43,618 crore.
Given the slower pace of government spending so far in the current financial year, the net cash outgo won’t impact the budget math as most of it would be adjusted against savings by a number of departments and ministries.
“The net cash outgo under the 1st Supplementary Demand for Grants is relatively modest, and could end up being offset by savings in departments other than those included in this supplementary, for instance capital expenditure,” Icra chief economist Aditi Nayar said. “We don’t see this additional expenditure as posing a risk to the achievement of the fiscal deficit target (4.9% of GDP), given the expectations of capex undershooting the budgeted amount by at least Rs 1 lakh crore,” Nayar said.
The additional spending includes Rs 9,692 crore towards PM-KISAN and agriculture infrastructure, Rs 9,500 crore for rural telecom connectivity, Rs 6,594 crore for nutrient-based fertilser subsidy, Rs 4,840 crore for police force and Rs 4,001 for defence services.
The Centre further pared the fiscal deficit target to 4.9% of GDP for FY25 in the full budget presented in July from 5.1% projected in the interim Budget in February as it used Rs 1.3 lakh crore extra dividends from the Reserve Bank of India to trim borrowings. The fiscal deficit had touched a record high of 9.2% in Covid-hit FY21, triggering a fiscal consolidation path. Given that spending is lagging behind on-year so far, analysts fear that fiscal deficit may be even lower than 4.9% for FY25, despite a likely weaker nominal GDP growth than projected.
Source: The Financial Express
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