Govt seeks Parliament nod for additional spending of ₹1.5 tn in FY22

The government on Monday sought Parliament's approval for an additional spending of ₹1.58 trillion to meet its expenditure commitments towards settling loans taken from National Small Savings Funds (NSSF) for Pradhan Mantri Awas Yojana and higher fertiliser subsidy outgo as the war in Europe has led to soaring prices of soil nutrients and their feedstocks.

Finance Minister Nirmala Sitharaman presented the third and final batch of supplementary demands for grants in the Lok Sabha that among things also includes a sum of ₹8,141.76 crore for meeting expenditure on additional transfer to GST Compensation Fund and a sum of ₹8,353 crore  providing Grants for Creation of Capital Assets for State Governments under Pradhan Mantri Awas Yojana.

The supplementary demand for grant is an additional grant required to meet the required expenditure of the government over and above the amount for which Parliamentary nod was taken earlier. 

The need for additional expenditure has arisen as the fertiliser subsidy burden has exceeded the revised budget estimates in wake of developments in Europe, so an amount of additional ₹14,902 crore  is needed to meet the subsidy commitments. Also, need for the government to settle all financial liabilities towards NSSF before the end of the current fiscal will see it providing an additional around ₹30,000 crore.

The government has sought gross additional expenditure of ₹1,58,356.10 crore, but net cash outgo is expected to the tune of only ₹1,07,408.15 crore as additional expenditure is matched by savings of the Ministries/Departments or by enhanced receipts/recoveries aggregating to to ₹50,946.52 crore. 

Besides, a token provision of ₹143 lakh has been sought, one lakh for each item of expenditure, for enabling re-appropriation of savings in cases involving New Service or New Instrument of Service.

The last batch of demand for grants had also sought ₹14,000 crore for transfers to be made to states as grants for supporting Covid 19 vaccination and for facilitating capital expenditure ( ₹5,000 crore) under the scheme announced in the budget.

Apart from this, about ₹9,000 crore had been sought for department of financial services for providing Grants-in-aid to National Bank for Financing Infrastructure and Development and meeting additional expenditure towards Compounded interest support to Lending Institutions under Compounded interest support scheme for loan moratorium. The amount also includes additional transfers to National Investment Fund and Recapitalisation of Regional Rural Banks and public sector general insurers. 

The biggest block of ₹30,169.69 crore additional expenditure is for  meeting targeted Credit Linked Subsidy Scheme (CLSS) houses for Economically Weaker Section(EWS)/ Lower Income Group (LIG) category under Pradhan Mantri Awas Yojna- Urban(PMAY-U) and to settle the loan taken by Building Materials and Technology Promotion Council (BMTPC) from National Small Saving Fund (NSSF) for PMAY(U) (`33,000 crore). The government is also facing higher subsidy burden as the Russia-Ukraine conflict has led to a spike in urea prices. Also, other key raw materials such as ammonia and phosphate are also seeing upward pressure on prices due to rise in oil and gas prices. So, additional fertiliser subsidy is anticipated at around ₹14,902 crore for which parliamentary approval had been sought. 

The government has already sought Parliamentary approval for additional gross expenditure of ₹5.5 trillion under two previous supplementaries last year. The present demand for grant is the last before the end of current fiscal. Even with higher expenditure, government expects to keep its fiscal deficit under check as it has the cushion of increases in revenues and lower expenditure.