Government Seeks Nod For Rs 2.7 Lakh Crore Additional Spending

Fertiliser subsidy and defence pension are a significant expenditure item in the second supplementary demand for grants.

<div class="paragraphs"><p>Indian Rs 500 currency notes arranged for photograph. (Photo: Vijay Sartape/BQ Prime)</p></div>
Indian Rs 500 currency notes arranged for photograph. (Photo: Vijay Sartape/BQ Prime)

The Union government sought an approval from Parliament on Monday for additional spending for key items, such as fertiliser subsidy and defence pensions.

The second batch of supplementary demand for grants for fiscal 2023 includes 73 grants and three appropriations with a net outgo of Rs 1.48 lakh crore out of the total additional spend of Rs 2.7 lakh crore.

"Approval of the Parliament is sought to authorise gross additional expenditure of Rs 2,70,508.89 crore," the Finance Ministry said in a statement on its second and final supplementary demand for grants. "Of this, the proposals involving net cash outgo aggregate to Rs 1,48,133.23 crore and gross additional expenditure," it said.

The balance of Rs 1,22,374 crore is matched by savings.

Additionally, the government has provisioned for a token amount of Rs 1.29 crore, with Rs 1 lakh for each item of expenditure to enable re-appropriation of savings.

The fertiliser subsidiary, defence pension, telecom sector and compensation for the goods and services tax account for 73% of the total amount sought, according to Aditi Nayar, chief economist at ICRA Ltd.

Although a portion of the net cash outgo of Rs 1.5 trillion (lakh crore) may be offset by savings under other heads, it has raised the likelihood of a modest slippage relative to the revised estimate of the FY23 fiscal deficit of Rs 17.6 trillion. Regardless, bond yields are likely to take a cue from global yields and the expectations of monetary tightening at the upcoming policy review. 
Aditi Nayar, Chief Economist, ICRA Ltd.

Top Spends: Ferilisers, Defence Pensions

Fertilisers—both P&K and urea-based—continue to swell up the government's expenditure bill.

The One Rank, One Pension Scheme—which the cabinet cleared in December—is also a significant expenditure item in the second supplementary demand for grants.

Additional Fund Outlays Sought

Fertiliser Subsidy: Rs 36,325 crore

The break-up of the fertiliser subsidy is as follows: Payment for indigenous P&K subsidy for Rs 10,000 crore and imported P&K subsidy for Rs 11,000 crore. The total of Rs 21,000 crore include recoupment of advance of Rs 6,000 crore drawn from contingency fund of India.

In terms of urea subsidy, Rs 8,853.9 crore is earmarked towards indigenous urea subsidy, while Rs 6,471.5 crore is for imported urea subsidy. Again, a recoupment of advance towards the contingency fund of India for Rs 4,000 crore has been tabled.

According to revised estimates, the government's total spend on fertilisers in the current fiscal is expected to be at Rs 2.25 lakh crore, which was revised upwards from the budget estimate of Rs 1.05 lakh crore.

Other provisions for expenditure include:

  • Transfers to Universal Service Obligation Fund under the Department of Telecommunications: Rs 25,000 crore

Under the USOF, the government offers mobile and digital services to rural and remote areas where connectivity is otherwise lacking.

The USOF also launched a Telecom Technology Development Fund last October that looked to fund research and development in rural-specific communication technology applications among other ways to improve the telecom ecosystem.

  • Payment of regular pension and arrear component of the OROP: Rs 33,718 crore

The One Rank, One Pension scheme revised the pension benefits for armed forces personnel and their family pensioners with effect from July 1, 2019. The revision was announced by the Cabinet in December 2022, with an initial estimated outlay of Rs 8,450 crore annually.

  • Transfer of GST compensation to states: Rs 33,506 crore

The government has also provisioned for two additional transfers of Rs 29,617 crore and Rs 3,889 crore to the GST compensation fund, which will be released to the states in the second supplementary demand for grants.

The provision comes after the 49th GST Council, where the government decided to clear the pending balance GST compensation of Rs 16,982 crore for last June.

Additionally, the admissible final GST compensation to those states that have provided the revenue figures, as certified by the accountant general of the states, amounted to Rs 16,524 crore.

  • Allocation under Sovereign Green Fund: Rs 5,538.01 crore

The government has also penciled for an inter account transfer to the Department of New and Renewable Energy under the head of the sovereign green fund.

This provision will look to fund Rs 2,800 crore for solar power grids, Rs 1,413 crore for wind power grid, Rs 1 lakh for the National Green Hydrogen Mission and Rs 1,325 crore for the PM Kisan Urja Suraksha Evam Utthaan Mahabhiyan.

  • Provision for making interest payments: Rs 4,830.00