Centre seeks Parliament nod for net extra spending over ₹44,100 crore
- The government is currently holding consultations for the FY26 union budget to be presented on 1 February
New Delhi: The finance ministry on Thursday sought Parliament's approval for net extra spending of ₹44,143 crore in the current financial year for administrative and subsidy requirements, showed the first supplementary demands for grants tabled in the House.
The ministry also sought Parliament's nod for nearly an equal amount— ₹43,618 crore—which does not involve cash outgo due to savings or additional revenue receipts.
The net additional spending of ₹44,143 crore is unlikely to have a big impact on the government’s fiscal deficit target of ₹16.1 trillion as there could be some savings on the Centre’s ₹15 trillion effective capital expenditure this year given that the elections in the first quarter had slowed down spending in the initial months of the fiscal.
Also read: India’s April-October fiscal deficit narrows to ₹7.51 trillion, driven by RBI dividend and lower capex
Key items of additional spending involving cash outgo include ₹6,594 crore of fertilizer subsidy, ₹1,000 crore of subsidies given by the industry and internal trade department and ₹1,801 crore of pension spending by the telecom department. The supplementary demands for grants also include additional revenue spending by defence and home ministries.
The changes in spending requirements proposed are based on the trends in spending so far this year. Further revisions could happen in the budget session depending on extra requirements and savings.
Focus on Union budget
The government is currently holding consultations for the FY26 union budget to be presented on 1 February. Businesses and experts expect the thrust on infrastructure creation to continue, which will help in reducing the logistics cost for businesses and improve their competitiveness, while creating new jobs.
The construction sector has performed strongly on account of the Centre’s increased capital spending, with output expanding 10.5% and 7.7% respectively in the first two quarters.
“The central government will be able to meet its fiscal deficit target 4.9% set for the current financial year as pace of expenditure in initial months has been a bit slow,” explained D.K. Joshi, Chief Economist at rating agency CRISIL Ltd.
Also read: Centre likely to maintain capex push in FY26 to aid economic growth amid sluggish state spending
In the July budget, finance minister Nirmala Sitharaman set a fiscal deficit target of 4.9% of GDP. The goal is to reach a target of 4.5% or less by FY26, by maintaining a glide path. That is a steady decline from the 9.2% seen in the pandemic year of FY21.
The Centre had in July projected that net tax receipts would grow 11% over a year to ₹25.8 trillion in the current fiscal, slightly above the projected nominal GDP growth of 10.5%. The fiscal deficit or the gap between receipts and spending met through borrowing stood at ₹7.5 trillion or 46.5% of the full year target, at the end of October.
The Reserve Bank of India expects real GDP to grow at 6.6% and the finance ministry’s economic survey had in July projected a conservative 6.5-7% growth. In the first two quarters, the economy had grown 6.7% and 5.4% respectively, amid high interest rates and moderation of urban consumption.
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Business NewsEconomyCentre seeks Parliament nod for net extra spending over ₹44,100 crore
First Published:12 Dec 2024, 09:43 PM IST
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