With little over a month left before the Lok Sabha convenes on October 17 for what would probably be the last full-fledged session under the UPA government, the finance ministry is in the midst of working out the requirements under the supplementary demand for grants for the remaining fiscal.
The government is expected to raise the first and second batch of supplementary demand for grants in the forthcoming session, which is a combined monsoon and winter session. The session is scheduled to be concluded on November 21.
North Block mandarins will soon be reviewing the expenditure heads of various government ministries and departments. The budget division in the department of economic affairs of the finance ministry in consultation with the other ministries will then calculate the additional requirement of funds for the rest of 2008-09.
Even though the UPA government is on an austerity drive to cut down its expenses this year, it needs additional funds for the sixth pay commission pay out, issuing bonds for oil and fertiliser and possibly for the farm loan waiver as well. It is also likely to make extra provisions for relief and rehabilitation in wake of the Bihar floods.
As per the pay commission?s recommendations, the salary hikes will cost Rs 22,100 crore this fiscal, while the farm loans to be waived in three instalments is estimated at Rs 71,680 crore. The government has also budgeted Rs 7,500 crore for fertiliser bonds. Oil bonds for the fourth quarter of 2007-08 worth Rs 14,956 crore and for the first quarter of 2008-09 Rs 24,408 crore will all be issued after obtaining Parliamentary approval.
It is essential for the finance ministry to raise the supplementary demand for grants in the upcoming session, as normal Parliamentary business may not be resumed until the general elections scheduled for early next year. In such a scenario, government functioning and more importantly, the implementation of key social sector programmes will be affected without the requisite funds.
Traditionally, the first supplementary demand for grants is raised in the monsoon session and the second in the winter session. Additional funds are also raised by placing a third supplementary demand for grants in the Budget session, if necessary.
In 2007-08, the government sought Parliamentary approval for additional funds to the tune of Rs 20,412.14 crore in August and again in November for Rs 33,290.87 crore. In this year?s Budget session, yet another demand was placed for Rs 1,40,378.91 crore.
While normal grants are made at the time of the presentation of the Budget, if the amount granted is found inadequate, a supplementary demand for grants is then made later during the year.