New Delhi: The finance ministry on Thursday sought Parliament’s nod for gross additional cash spending of Rs9.1 trillion in the current fiscal ending 31 March through its fourth supplementary demand for grants.
However, the net cash outgo will amount to Rs85,315.30 crore, of which 70% is earmarked to compensate states for revenue loss on account of GST rollout while the balance Rs8.2 trillion will be met through savings by government departments during the fiscal year.
A total of Rs61,216 crore, which is about 71% of Rs85,315 crore, has been earmarked for the department of revenue. This includes Rs58,999 crore to be paid for revenue loss to states and Rs1,384 crore to be paid as central sales tax (CST) compensation.
Another major spending head is Rs15,066 crore towards grants-in-aid and creation of capital assets under various schemes.
As much as Rs9,260 crore would be spent for paying defence pensions, and Rs5,721.90 crore for meeting expenditure towards interest payment on market loans and treasury bills.
The government has sought Rs6.95 trillion for repayment of debt in the form of treasury bills, switching, ways and means advances and securities issued to international financial institutions by 31 March.
Aditi Nayar, principal economist, Icra Ltd said though the headline number of Rs9.1 trillion additional expenditure looks alarming, most of it is technical in nature.
“Therefore, the net impact of the Fourth Supplementary on the FY2018 fiscal deficit may be limited to below Rs24,000 crore. Nevertheless, this remains a source of some concern, given that the government’s fiscal deficit had stood at Rs6.8 trillion in 10 months of FY2018, overshooting the revised estimate of Rs5.9 trillion," she added.
Finance minister Arun Jaitley revised his fiscal deficit target for 2017-18 to 3.5% of GDP from 3.2% of GDP citing disruptions caused by demonetisation and implementation of GST.
For 2018-19, the government has set a target of 3.3% of GDP.
The government seeks to achieve the fiscal deficit target of 3.5% of GDP after cutting down capital expenditure by Rs36,000 crore in 2017-18.
A shortfall of Rs50,000 crore on account of GST also forced the government to revise its fiscal deficit target.
Part of the shortfall in revenue was met through higher direct tax collections and disinvestment.
The government hopes to breach the disinvestment target in 2017-18 by collecting Rs1 trillion against the budget estimate of Rs72,500 crore.