Centre seeks House nod for net additional spend of Rs 1.48 trn

No big slippage seen from fiscal deficit target of 6.4%

fertilizer, economy
The net additional expenditure is seen to be largely matched by savings of the ministries or by enhanced receipts or recoveries, aggregating to Rs 1.22 trillion. (IE)

The government on Monday sought Parliament’s approval for gross additional expenditure of around Rs 2.7 trillion, with net cash outgo of Rs 1.48 trillion, while presenting the second supplementary demands for grants for the current fiscal.

Yet, analysts expect no major slippage relative to the fiscal deficit target of 6.4% of the Gross Domestic Product, given the likely savings on other fronts.

An extra Rs 29,656 crore on fertiliser subsidy for FY23 over the revised estimate is a key component of the fresh demands. After the additional allocation, the spending on fertiliser subsidy would rise to about Rs 2.55 trillion in FY23 as against the budget estimate of Rs 1.05 trillion and the revised estimate (RE) of Rs 2.25 trillion.

Even though the supplementary demand for fertiliser subsidy is Rs 36,325 crore, there was an adjustment of around Rs 6,000 crore towards advances released from the Consolidated Fund of India.

The net additional expenditure is seen to be largely matched by savings of the ministries or by enhanced receipts or recoveries, aggregating to Rs 1.22 trillion.

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The Centre would be saving a substantial sum on centrally sponsored schemes (CSS), which is not fully captured in the supplementary demand for grants, an official said.

Among other major heads, the government sought additional spending of Rs 33,718 crore to meet the extra expenditure for provision for on account of regular pension and enhanced One Rank One Pension (OROP) rates for two months i.e. for January 2023 and February 2023. The arrears component of OROP is Rs 24,465.57 crore for the Army, Rs 1,322 crore for the Navy and Rs 2,350 crore for the Air Force.

The net cash outgo under the supplementary demand for grants is dominated by fertiliser subsidy, defence pensions, the telecom sector and GST compensation, together accounting for 73% of the total amount. In the supplementary demand, the Centre has provided an amount of Rs 33,506 crore towards goods and services tax (GST) compensation release to states.

gAlthough a portion of the net cash outgo of Rs 1.5 trillion may be offset by savings under other heads, it has raised the likelihood of a modest slippage relative to the revised estimate of the FY23 fiscal deficit of Rs 17.6 trillion,” rating agency Icra chief economist Aditi Nayar said. Regardless, bond yields are likely to take a cue from global yields and the expectations of monetary tightening at the upcoming policy review, Nayar added.

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It is likely that the tax collections, net of transfers to the state, may fall slightly short of the RE of Rs 20.87 trillion in FY23, primarily due to a moderation in corporate tax receipts. There may be a slippage from the RE level for disinvestment receipts as well, though it may be bridged to a large extent from extra receipts as CPSE dividends.

Till March 5, the Centre has released Rs 3.1 trillion to states, or about 70% of the CSS outlay for FY23. Of the Rs 3.1 trillion released, Rs 1.75 trillion or more than 56% were still lying with the Single Nodal Agencies (SNAs) of states for implementation of the CSSs. Additionally, about Rs 40,000 crore is lying idle with the state treasuries from previous year releases of the Centre for such schemes (pre-FY23 releases). The Centrewill unlikely release more CSS funds to states in March unless they spend the balance lying with SNAs or their treasuries, an official said.

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First published on: 14-03-2023 at 02:45 IST
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