Centre plans additional spending of Rs 66,113 crore, move may hit fiscal deficit

NEW DELHI: The government has planned an additional expenditure of Rs 66,113 crore with a net cash outgo of `33,380 crore, which could have some adverse impact on the fiscal deficit for the current financial year.

The government has presented the second supplementary demand for grants seeking nod for additional spending in the current fiscal.

The major chunk of allocation has gone to the department of food and public distribution (`3,480 crore) for food subsidyrelated spending, the Mahatma Gandhi Rural Employment Guarantee Scheme (Rs 3,595 crore) and Rs 5,905 crore for meeting additional requirement for pensions following implementation of the Seventh Pay Commission.


Finance minister Arun Jaitley moved the second batch of Supplementary Demands for Grants for 2017-18 in the Lok Sabha. The government has also set aside Rs 960 crore for the Goods and Services Tax Network (GSTN). This is towards meeting the establishment-related expenditure including payment of advance user charges.

The health sector got an additional Rs 4,000 crore and another Rs 1,034 crore has been set aside for creation of capital assets, subsidies and other charges for Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya), and Rs 3,983 crore for police.

The education sector got Rs 2,200 crore.

The supplementary includes Rs 32,732 crore of technical grants, which are met by additional receipts/recovery of corresponding savings of the ministries and departments. There is no additional spending on this count and therefore will not have an impact on the fiscal deficit.

The biggest allocation under this head was of Rs 20,532 crore for the department of fertiliser while road transport and highways got Rs 15,908 crore.

The additional spending could put pressure on government finances. The government has budgeted a fiscal deficit of 3.2% of GDP for FY18.

The spending is likely to exert pressure on government to meet its FY18 fiscal deficit target of 3.2%, (but) looking at second half growth profile, it is expected that the government would be able to absorb some of this adverse impact, said DK Pant, chief economist at India Ratings & Research.