Demand for grants. Ministries, departments asked to submit supplementary demand for grants proposals

The Finance Ministry has sought proposals from Central Ministries and Departments for the first Supplementary Demands for Grants (SDG). The expectation is that the Oil Ministry could place a demand for funds to provide for LPG subsidy, while the Department of Fertilisers is also expected to pitch for additional money.

“The First Batch of Supplementary Demands for Grants for 2023-24 is proposed to be placed before Parliament in the ensuing session,” an office memorandum issued by the Finance Ministry said. Further, pre-Budget meetings to finalise the RE (Revised Estimate) for 2023-24, and BE (Budget Estimate) for 2024-25 have been scheduled from October 10 till November 14. “The Ministries are, therefore, required to submit their supplementary proposals within seven days from the date of completion of their pre-Budget meetings,” it said.

SDG refers to the statement of supplementary demands laid before Parliament, showing the estimated amount of further expenditure necessary for a financial year, over and above the expenditure authorised in the Annual Financial Statement for that year. The demand for supplementary grants may be token, technical or substantive/cash.

Token refers to a symbolic amount (₹1 lakh or so) to be allocated for any scheme, technical means savings of a Ministry/ Department to be used for a different purpose, or for a scheme where more funds are required. Substantive/ cash implies fresh allocation beyond what is provided in the Budget and is to be met through fresh withdrawal from the Consolidated Fund of India.

The budget size for fiscal year 2023-24 is over Rs 45 lakh crore, of which over Rs 16.71 lakh crore (over 37 per cent) has been spent in the first five-month (April-August) period. Though there has been a significant increase in capital expenditure, part of the revenue expenditure on Nutrient-Based Fertiliser Subsidy and Urea Subsidy, has already touched 78 per cent and 48 per cent in the first five months. The expectation is that these two will exceed the Budget allocation, which means the Department of Fertilisers could seek additional allocation, either through savings or fresh allocation.

Also read: Urea subsidy may be below ₹1-lakh cr in FY24 against BE of ₹1.31-lakh cr 

Petroleum subsidy

The Budget has pegged the petroleum subsidy at Rs 2,257 crore, mainly for the Ujjwala LPG scheme. Since the government has finalised an additional 75 lakh connections under the scheme, the subsidy required could overshoot what has been budgeted. At the same time, there could be a demand for assistance from oil marketing companies, who have to foot the Rs 200 price-cut on each domestic LPG cylinder. All these could lead to demand for additional allocation.

The big question is whether additional expenditure will lead to a revision of the fiscal deficit, which is pegged at over Rs 17.86 lakh crore, or 6.9 per cent of GDP. Finance Ministry officials have said tax collection, especially GST collection, has been higher than expected. Also, the just-in-time release mechanism, where funds are released only when the previously released funds are used, has led to a saving. So, the government is likely to achieve its fiscal deficit target.

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