With new spending obligations of at least Rs 38,000 crore having arisen, the Centre could find it even more difficult to meet the fiscal deficit target for the year. On February 1, the government had unveiled the Union Budget 2018-19 with an expenditure estimate of Rs 24.42 lakh crore.
The Indian basket of crude at the current level (it ruled at $78/barrel over the weekend) as against the budget projection of around $60/barrel coupled with the rupee’s fall would necessitate extra oil (LPG/kerosene) subsidy of at least Rs 12,500 crore over the budgeted Rs 25,000 crore, officials reckon. (Moody’s has estimated India’s fuel subsidies could total Rs 34,000-53,000 crore in FY19, the highest since FY15 with Brent crude oil price range of $60-$8/barrel). The price support package for farmers for the 2018-19 crop year has an estimated cost of `15,053 crore; since the amount is meant for kharif 2018 and rabi 2019, a little over half could be expected to be spent in the current financial year (it is another matter the cost of the scheme could turn out to be much higher than estimated if the entire demand for the support is met).
To help Air India meet working capital needs, an extra Rs 2,000 crore (over and above `1,630 crore provided already) would be allocated this year.
The 13% increase in paddy MSP for the current kharif season would entail additional expenditure of `12,000 crore, though the Centre has the option to keep part of this off-budget for the current year, by arranging finance for FCI from NSSF.
According to the sources, the Pradhan Mantri Jan Arogya Yojana, under which 10.74 crore families will be provided health cover of `5 lakh each would require `35,00 crore over and above `4,000 crore budgeted (including supplementary) for the year.
After the Budget was presented, the Centre has got Parliament approval to spend an additional `6,000 crore by raising supplementary demands in July.
Recently, finance minister Arun Jaitley has expressed confidence that the tax collection target for FY19 would be met, if not exceeded and disinvestment receipts too would be in excess of target of `80,000 crore. However, the shortfall in GST collections and the fact that disinvestment receipts so far have been below `10,000 crore exert pressure on the deficit.
While Jaitley said he would stick to the capex estimate of `3 lakh crore for the year, analysts see the possibility of a rejig among other expenditure categories, and this might result a minor reduction in the overall spending. The government has reiterated that the FY19 fiscal deficit target of 3.3% of GDP would be met.