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Signalling severe economic stress, the Finance Ministry on Thursday sought Parliamentary nod to spend little over ₹21,000 crore more during the current fiscal. This includes saving of nearly ₹2,200 crore while net cash outgo would be nearly ₹19,000 crore.
After presenting the Union Budget, the Finance Ministry seeks approval from Parliament through ‘Supplementary Demands for Grants’ for additional expenditure above the Budget Estimate. Money for additional expenditure is sourced either from the savings of various Ministries/Departments or revenue generation. Since, collection from taxes is below expectations, there is a very slim chance of getting more that what has been projected in the Budget.
At the same time, there are research reports projecting fiscal deficit could be wider than what was projected in the Budget, but the government seems to be focussing on the necessary expenditure only.
According to the first batch of ‘Supplementary Demands for Grants’ tabled in the Lok Sabha, the Finance Ministry has sought to spend ₹8,820 crore ‘for Grant to Union Territories of Jammu & Kashmir and Ladakh in lieu of J&K State share of 14th Finance Commission Award.’ Jammu & Kashmir and Ladakh have new Union Territories from November 1. Since devolution from Central taxes covers only States as Union Territories are provided grants from the Home Ministry, this provision has been made.
The second big amount is ₹3,387.46 crore which will be used for meeting expenditure towards salaries and cost of ration for police, ₹2,500 crore has been provided as an additional requirement of fund for recapitalisation of insurance companies. The Finance Ministry has also made a provision of capital infusion in IDBI Bank Ltd through issuance of recapitalisation bonds worth ₹4,557 crore, but that will be met through savings.
The first batch of ‘Supplementary Demands for Grants’ signals that the government will not go for any fresh expenditure and there is also a possibility that it might cut down some of the expenditure.
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