The Finance Ministry on Friday sought approval from the Lok Sabha to spend ₹64,000 crore to settle dues of Air India and ₹58,000 crore to incur additional expenditure on fertiliser subsidy. These are expected to impact the fiscal deficit as projected in the Budget.

These are part of supplementary demands for grants (SDS) tabled in the Lok Sabha by Finance Minister Nirmala Sitharaman.

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“Approval of the Parliament is sought to authorise gross additional expenditure of ₹3,73,761 crore. Of this, the proposals involving net cash outgo aggregate to ₹2,99,243.04 crore and gross additional expenditure, matched by savings of the Ministries/Departments or by enhanced receipts/recoveries aggregates to ₹74,517.01 crore,” said the introductory note to the SDS.

Supplementary demands seek approval from the Parliament for expenditure over and above that prescribed in the Budget. This could be for fresh schemes, requests for more money in existing schemes, or a combination of both. Expenditure is met through net cash outgo or savings from Budget provisions.

Funds for Air India

According to SDG, over ₹62,000 crore has been proposed to be spent “for equity infusion in AIAHL (Air India Asset Holding Limited) for repayment of past government-guaranteed borrowing, past government-guaranteed SLB (Sale and Lease back), lease rental, and past dues and liabilities of AI (Air India) Ltd”.

Another ₹2,628 crore will be spent “for loans and advances to Air India for recoupment of advance from the Contingency Fund of India.”

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On October 8, the government approved handing over Air India to Talace Pvt Ltd — a wholly-owned subsidiary of Tata Sons — along with equity shareholding of Air India in AIXL (Air India Express) and AISATS (Air India SATS Airport Services) for ₹18,000 crore. However, the government is expected to get ₹2,000 crore only as the remaining amount will be a loan to be taken over by Tata company.

Fertiliser subsidy

Considering increasing demand, the government has sought approval to spend over ₹58,400 crore on fertiliser subsidy. This includes ₹43,430 crore for subsidy on indigenous and imported P&K (phosphatic and potassic) and ₹15,000 crore for urea. This is over and above the ₹80,000 crore as proposed in the Budget.

Payment to exporters

Provision of over ₹53,000 crore has been proposed to pay pending export incentives/remissions under various export promotion and remission schemes and the current year’s requirements for RoSCTL (Rebate of State and Central Taxes and Levies).

Food storage

The Finance Ministry has also proposed to spend over ₹49,000 crore towards various schemes of food storage and warehousing.

Expert take

Aditi Nayar, Chief Economist with ICRA, said that at the end of October 2021, 52 per cent of the full-year expenditure target had been completed. A portion of the higher than expected net cash outgo of ₹3-lakh crore in the second supplementary demand for grants will need to be absorbed through savings in other demands to curtail the impact on the fiscal deficit.

Nonetheless, “there is near certainty that the fiscal deficit will exceed the budgeted ₹15.1-lakh crore despite our assessment that net tax revenues and RBI surplus transfer will together surpass the BE (budget estimates) by ₹1.7-lakh crore,” she said.

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