 "Govt seeks Parliament nod for additional spending")
Much of the expenditure at around Rs 11,000 crore is to be incurred on giving compensation to states for cut in Central Sales Tax so that they can be on board for goods and services tax (GST). Food subsidy and creation of strategic oil reserves accounted for other large amounts.
However, total gross expenditure, contained in the supplementary tabled by finance minister Arun Jaitley, would be Rs 36,953 crore, but Rs 17,722 crore would be met by savings of ministries and departments or their enhanced receipts.
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Other expenditures in the supplementary:
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The net cash outgo would not result in any significant variation in total estimated expenditure, pegged at Rs 16.8 lakh crore, in Revised Estimates for 2014-15. The RE is 6.3 per cent lower than Rs 17.94 lakh crore, pegged in BE.
As such, the Centre’s fiscal deficit, projected at 4.1 per cent of the country's gross domestic product for 2014-15, will not be affected by the supplementary, the finance ministry said in a statement here.
As the states become crucial for enactment of constitutional amendment law to enable roll out of GST,the government asked for Parliament approval for Rs 10,761 crore for compensation to states for losses incurred due to cut in CST. A sum of Rs 242 crore was asked for this purpose by the Centre for Union Territories.
An amount of Rs 11,000 crore has already been pegged for this purpose in RE of this financial year. The BE did not make any provision for this purpose. The government will set aside Rs 15,028 crore for this purpose in 2015-16, according to BE.
CST, a levy imposed on inter-state movement of goods, was cut from four per cent to two per cent in phases after state-level VAT replaced sales tax from April one 2005 in most states and across all states subsequently.
The CST compensation has been the bone of contention between the states and the Centre under the previous United Progressive Alliance (UPA) government, which has been holding back talks on GST. Jaitley had assured states of CST compensation, while asking their support for constitutional amendment Bill.
He had tabled the Bill in the winter session of Parliament in December last year. The government hopes to pass it in this session.
The supplementary demand for grants also sought Rs 7,390 crore additional expenditure for various sorts of food subsidy. Of this, Rs 1,376 crore was for states under the food security law, Rs 1,300 crore for decentralised procurement of food grains, also to states. Besides, Rs 3,000 crore was a subsidy for Food Corporation of India and others for food grain transaction and Rs 2,000 crore to them under the food scurity law.
A sum of Rs 804 crore would be for embattled sugar mills, comprising Rs 604 crore under scheme for extending financial assistance to sugar undertakings and Rs 200 crore under incentive on marketing and promotions services for raw sugar production.
CST compensation and food subsidy makes for almost half of gross amount of the supplementary.
It has also earmarked Rs 2,399 crore towards Indian Strategic Petroleum Reserve Ltd for creation of strategic oil reserve.
This will not entail any additional cash outgo as the investment would be made by saving elsewhere in the petroleum sector, the supplementary demand said.
The government, however, did not seek any additional amount for meeting its fuel subsidy bill.
This has become possible because of the declining prices of crude oil in the international market, which have helped in keeping the fuel subsidy bill under check.