Govt seeks to spend Rs 45,000 cr more

Says the proposals will not result in a significant rise in the budgeted fiscal deficit

The government today sought Parliament approval for gross additional expenditure of Rs 44,945 crore in the current financial year. Of this, the net cash outgo will be Rs 19,812 crore, while the rest will be met by savings of the ministries or enhanced receipts. A significant part of this additional grant would be spent on food and fertiliser subsidy.

The government said the proposals would not lead to significant variation in the Budget estimate to restrict fiscal deficit to 5.5 per cent of GDP this year.

In the second supplementary demands for grants tabled in the Lok Sabha, the government sought permission to spend Rs 5,000 crore for subsidy on decontrolled fertilisers. Parliament’s nod was sought to give an equal amount to the department of food and public distribution. The funds will be used for making payment to the Food Corporation of India, subsidy to state governments on decentralised procurement of food grains, import of edible oil, procurement of sugar, and interest subvention.

“I don’t think it will have much impact on the fiscal deficit,” said Finance Minister Pranab Mukherjee after presenting the supplementary in the House amid protests by the Opposition over the ongoing controversy over telecom spectrum allocation. He added all additional spending was with regard to developmental expenditure.

Other big expenditure to be met from the total cash outgo will include grant of Rs 3,000 crore to the rural development ministry for meeting additional requirement of Pradhan Mantri Gram Sadak Yojana and implementing schemes in the North-East and Sikkim. The home ministry will get Rs 2,000 crore for meeting the additional salary expenditure of the central paramilitary forces. The government will give Rs 278 crore to state-run oil marketing companies to compensate them for selling fuel below cost.

A grant of Rs 12,000 crore to the finance ministry for meeting an additional requirement of funds towards repayment of cash management bills will be met through the savings or receipts of Rs 25,132 crore. Another grant of Rs 5,000 crore will be made to the Food Corporation of India for meeting its cash flow requirements towards procurement of food grains for targeted public distribution system. The amount, to be recovered in the same financial year, will not entail net cash outgo. The textiles ministry will get Rs 6,797 crore to write off loans and liabilities and waiver of interest.

The additional expenditure may help improve the liquidity situation in the market. The government has a Budget target to spend Rs 11.09 trillion in 2010-11. In the first supplementary, it sought Parliament’s nod to spend Rs 68,294.30 crore, which entailed net cash outgo of Rs 54,588.63 crore. The spend may erode the surplus of Rs 1,06,000 generated through the sale of 3G spectrum, against the Budgeted amount of Rs 35,000 crore.