Govt seeks Parliament approval for Rs 51,000 crore extra cash outgo

Gross additional spending to be matched by savings of Rs 6.27 trillion

The government has sought the approval of Parliament for a gross additional expenditure of ₹6.79 trillion, involving a net cash outgo of ₹51,463 crore, through the second supplementary demand for grants. 

 

The gross additional spending would be matched by savings of ₹6.27 trillion by ministries and departments or by enhanced receipts and recoveries, and thus will not impact the fiscal deficit.

 

The finance ministry has also sought a token provision of ₹67 lakh — ₹1 lakh for each item of expenditure — for enabling re-appropriation of savings in cases involving new service or new instrument of service.

 

More than 85 per cent of the net cash outgo of ₹514.6 billion in the second batch stems from additional allocations towards fertiliser subsidy, telecom department, defence and other pensions, including the Unified Pension Scheme (UPS). 

 

 

The largest allocations are ₹13,449 crore and includes ₹7,000 crore for transfer to the fund for UPS.

 

The second supplementary grant also includes ₹12,000 crore allocated to the department of fertilisers for subsidies.  

 

The first supplementary demands for grants had approved a gross additional expenditure of around ₹87,762 crore, involving a net cash outgo of ₹44,123 crore.  

 

“We believe that expenditure savings by other heads would provide a cushion against the aforesaid net cash outgo in the second batch and prevent any sharp overshooting in the government’s total expenditure in FY25 vis-à-vis the revised target,” said Aditi Nayar, chief economist, ICRA. 

 

The upward revision of the nominal gross domestic product (GDP) estimate by 2.1 per cent in the second advance estimate, experts said, has provided the government the headroom to contain the fiscal deficit to GDP ratio at 4.8 per cent in FY25.

 

This comes even if the additional spending pushes up the fiscal deficit number above the revised estimate of ₹15.7 trillion.

 

“Overall, we expect the fiscal deficit to print at 4.7 per cent of GDP in FY25, slightly lower than the revised estimate for the financial year,” Nayar added.