Govt seeks approval for Rs 4.36 trillion additional spending in FY23

Fertiliser, food subsidies, payments to OMCs for LPG dominated supplementary demand

The finance ministry has sought Parliament’s approval for additional gross spending of Rs 4.36 trillion in FY23 through the first tranche of supplementary demands for grants.

While net cash outgo is pegged at Rs 3.26 trillion, the rest will be matched by savings or enhanced receipts.

The additional spending demands are dominated by fertiliser subsidy, food subsidy, payments to oil-marketing companies (OMCs) for domestic LPG operations, and funds towards the rural job guarantee scheme.

Aditi Nayar, chief economist at ICRA, said the total net cash outgo under the supplementary demand for grants was smaller than her expectations. “With savings likely under other heads, we do not see the supplementary demands resulting in a meaningful breach of the fiscal deficit target of 6.4 per cent of GDP. Additionally, capex has been augmented by around Rs 31,000 crore, which should help ensure that the capex target is achieved,” she said.

Of the total Rs 1.09 trillion sought for fertiliser subsidy, Rs 23,122 crore has been allocated for P&K (phosphatic and potassic) and Rs 86,167 crore for urea. This is over and above the Budget allocation of Rs 1.05 trillion for fertiliser subsidy.

The additional allocation is meant to help insulate the farmers from the impact of a steep increase in the cost of fertilisers due to a sharp rise in international prices of fertilisers and raw materials.

The government's fertiliser subsidy will rise to Rs 2.3-2.5 trillion in this fiscal year but the bill may fall by 25 per cent in FY24 with moderation in global prices, the Fertilisers Association of India said on Tuesday.

The government has pegged the additional outgo for petroleum subsidy at Rs 24,944 crore, above the Budget allocation of Rs 5,812 crore, mostly for payments to OMCs under domestic LPG operations and providing LPG connections to poor households under the Pradhan Mantri Ujjwala Yojana (PMUY).

The finance ministry also sought additional expenditure of Rs 80,348 crore for food subsidy, including Pradhan Mantri Garib Kalyan Anna Yojana, which has been extended till December-end. In the Budget, the government had allocated Rs 2.07 trillion for food subsidy for FY23.

The rural development ministry will receive around Rs 45,176 crore for additional expenditure towards the rural job guarantee scheme and Pradhan Mantri Awas Yojana-Rural.

The railways ministry, which has already exhausted 75 per cent of its Budget allocation for capex by October, has been provided additional Rs 12,000 crore for meeting additional expenditure under capital outlay on commercial lines.

While Rs 9,951 crore has been sought for additional transfer of GST compensation cess to states and Union Territories, Rs 7,630 crore has been asked for additional revenue expenditure for defence services. The UT of Jammu and Kashmir will receive Rs 8,957 crore for meeting the resource gap.