New Delhi: Government on Tuesday sought parliamentary approval for a net Rs 9,016 crore ($2.04 billion) extra spend in the current fiscal year ending March and said the additional expenses will not impact its fiscal deficit and borrowing targets.
The government, which plans to spend an additional gross Rs 34, 724 crore, will fund the bulk of the extra spending from its internal savings and the remainder through its cash balance, documents presented by the finance minister in parliament showed.
“It (additional spending) will not affect (fiscal deficit) that way if revenue buoyancy is there,” Pranab Mukherjee told reporters after seeking parliamentary approval for the higher spending.
“I will keep the borrowing within my limit.”
In February, the government had budgeted a total spending of$284 billion for 2011-12, projecting a fiscal deficit target of 4.6 of the gross domestic product (GDP).
New Delhi plans to borrow a gross Rs 4.17 trillion ($94.7 billion) in 2011-12, with 60 of the target to be completed by the end of September.
With high global commodity prices, particularly oil prices threatening to inflate India’s subsidy bill, debt market participants are bracing themselves for a higher fiscal deficit and higher borrowing this year.
Most market participants believe the government will increase its market borrowing by Rs 30,000 crore to Rs 70,000 crore, depending on its fiscal performance.
The government has budgeted to spend about $30 billion on major subsidies in 2011-12.
The fuel subsidy bill was budgeted at around $5 billion, assuming global oil prices at below $100 a barrel. Brent crude currently trade above $116 a barrel.
Mukherjee on Tuesday did not provide any additional spending for oil subsidies nor did he specify when he intends to provide for higher spending on oil subsidies.
However, he said the government will again seek parliament’s approval for additional spending in November-December.
In June, after dragging its feet for long, the government had raised state-controlled prices of diesel, kerosene and cooking gas to rein in its mounting subsidy bill.
The increase was the first in a year and would pare revenue losses for state-run oil companies by Rs 5,000 crore to about Rs 1.2 trillion in this financial year.
State-run refiners such as Indian Oil Corporation , Hindustan Petroleum and Bharat Petroleum that buy oil at global prices are partially reimbursed for selling fuel at low prices through a complex cross subsidy scheme.