New Delhi: The Indian government on Tuesday sought parliamentary approval to spend a gross additional $14.78 billion in the fiscal year to end-March 2011, on top of the budget target of around $240 billion.
Finance minister Pranab Mukherjee sought lawmakers approval to spend a net additional $11.8 billion and documents presented by him in parliament said the proposed extra spending would not derail the government’s plans to keep fiscal deficit capped at 5.5% of GDP in the current financial year.
“The net cash outgo ... will not have any adverse impact on the fiscal deficit projected in budget estimates 2010-11 due to excess receipts under non-tax revenue in 2010-11,” according to the documents.
Better-than-expected Rs1 trillion ($21.6 billion) of receipts from third-generation (3G) wireless spectrum auctions against the budgeted Rs35,000 crore boosted non-tax revenue receipts for the year, which some officials and analysts say could narrow the fiscal deficit by a full percentage point.
These additional funds would be mainly used to pay oil retailers Rs14,000 crore ($3.03 billion), as compensation for selling fuel below market rates, and Rs5,790 crore as fertiliser subsidies, according to the documents.
Government also plans to spend Rs8,467 crore to raise its vote share in the International Monetary Fund. There are calls for the IMF to recast itself and grant more powers to emerging economic powers like India, China, Brazil and Russia.
The government seeks legislative nod for spending more than the budgeted estimates to finance increases in major expenditure heads such as interest payments and subsidies.
Mukherjee in February, while setting the fiscal deficit target, had said the gap would be partially funded through market borrowings of Rs4,570 crore.
But expensive social and infrastructure projects could hike government spending and keep up the pressure on public finances. For instance, estimates presented by agriculture minister Sharad Pawar last week suggested a proposed food security law could nearly double the food subsidy bill to Rs1.07 trillion .
With the economy set to grow at 8.5% in the current fiscal year that began on April 1, India expects to collect about Rs7.47 trillion in taxes in the year.
So far, it has received Rs83,994 crore in taxes in the first three months of the fiscal year and has spent Rs2.42 trillion.