The Centre on Monday sought Parliament’s nod for net additional spending of Rs 51,463 crore in the second batch of supplementary demand for grants for FY25, likely entailing a higher government expenditure than the revised estimate (RE) of Rs 47.16 lakh crore, sources said.
More than 85% of the net cash outgo from additional allocations is towards fertiliser subsidy, telecom department, defence pensions and other pensions, including the unified pension scheme (UPS).
For meeting additional expenditure on fertiliser subsidy, an extra allocation of Rs 14,100 crore has been made towards urea and nutrient-based fertiliser subsidy. As much as Rs 13,449 crore has been provided towards superannuation and retirement benefits, including UPS. For defence pension, another Rs 8476 crore has been allocated.
Sources said the total expenditure may exceed RE but remain within the budget estimate, which is the appropriation granted by Parliament.
Due to a slower pace of capex and scheme implementation on account of general election, the Centre had cut the total expenditure by over 2% in RE to Rs 47.16 lakh crore from Rs 48.2 lakh crore in the BE.
So, as a whole, the appropriation now sought will be within the total appropriation granted by parliament for all demands in the BE.
In a note, rating agency ICRA said that expenditure savings by other heads, would provide a cushion against the aforesaid net cash outgo in the second batch and prevent any sharp overshooting in the government’s total expenditure in FY25 vis-à-vis the revised target.
“The nominal GDP estimate for FY25 has been revised upwards by around 2.1% in the Second Advance Estimate vis-à-vis the First Advance Estimate, which provides the GoI headroom to contain the fiscal deficit to GDP ratio at 4.8% in FY2025 even if the additional spending pushes up the fiscal deficit number above the RE of Rs 15.7 lakh crore,” ICRA chief economist Aditi Nayar said.
“Overall, we expect the fiscal deficit to print at 4.7% of GDP in FY25, slightly lower than the RE for the fiscal,” she added.
In the second supplementary demand, the government has sought gross additional spending of over Rs 6.78 lakh crore, of which Rs 6.27 lakh crore would be matched by savings and receipts.