India's fiscal deficit is set to soar further, with the Government's expenditure set to climb by over Rs 63,000 crore on account of higher spend on food, fuel and fertiliser subsidies.
The Centre has sought Parliamentary approval for gross additional expenditure of Rs 63,180.24 crore, nearly double the additional spend of Rs 34,725 crore it demanded in the first batch of supplementary demand for grants in August.
The second batch of supplementary demand for grants, which was tabled in the Lok Sabha today by the Union Finance Minister, Mr Pranab Mukherjee, includes a net cash outgo of Rs 56,848.46 crore.
Subsidy outgo
A substantial part of this cash spend would go towards fuel, food and fertiliser subsidies. For compensating the oil marketing companies towards estimated under-recoveries on sale of petroleum products, the Centre has provided Rs 30,000 crore.
The net cash outgo towards fertiliser subsidies is estimated at Rs 13,778.93 crore. For food subsidies, the additional spend has been pegged at Rs 2,298 crore.
With savings of the Ministries set to provide Rs 6,330.88 crore, the estimated net cash outgo of Rs 56,848.46 crore will have an adverse impact on the fiscal deficit numbers projected for 2011-12, say economy watchers.
The Finance Minister, Mr Pranab Mukherjee had recently remarked that the Centre should not over-stretch itself to reach the fiscal deficit target for 2011-12 as it may affect growth.
The Centre also proposes to spend by cash a sum of Rs 100 crore for creating a Women's Self Help Groups (SHG) with National Bank for Agriculture and Development (NABARD).
It would also spend Rs 100 crore for creating an India Microfinance Equity Fund with Small Industries Development Bank of India (SIDBI) in pursuance of the budget announcement 2011-12.
A sum of Rs 300 crore is also proposed to be spent for meeting the additional expenditure on maintenance and repairs of national highways undertaken by the roads wing.
In the first batch of supplementary demand for grants, the net cash outgo was Rs 9,016 crore, with as much as Rs 2,300 crore going to Members of Parliament towards increase in their annual allocation under the Member of Parliament Local Area Development Scheme (MPLADS) from Rs 2 crore to Rs 5 crore a MP.