Government keeps supplementary demand down to Rs 501 crore; skips CST provision

NEW DELHI: Keeping a tight leash on spending, the government sought parliament’s approval for additional net spending of only Rs 501 crore in the first supplementary demand for grants, skipping any provision toward central sales tax (CST) compensation to states. The first batch of supplementary demands for grants for 2014-15, tabled in the Lok Sabha by finance minister Arun Jaitley, is pegged at Rs 12,529.48 crore that will be largely met through internal savings and enhanced recoveries.

The centre was expected to provide for CST compensation in the first supplementary but government officials said it would now be done in the budget. “First tranche would be provided within this fiscal,” one of them said. The government has budgeted a fiscal deficit of 4.1% of GDP for 2014-15. Fiscal deficit touched 89.6% of budget estimate for 2014-15 to cross Rs 4.75 lakh crore at end of October.

The government has already tightened its belt to stay within target. The additional amount is being sought for meeting the fertiliser subsidy and subscription for international agencies. The government, however, did not seek any additional amount for meeting its fuel subsidy bill. This has become possible because of declining prices of crude oil in international markets, which helped keeping fuel subsidy bill in check.

“Proposals involving net cash outgo of Rs 500.71 crore will not result in any significant variation in total estimated expenditure,” it said. The government’s disinvestment programme kicked off on Friday with a 5% sale in Steel Authority of India that fetched over Rs 1,700 crore.

The additional outlay towards fertiliser subsidy for urea has been pegged at Rs 5,000 crore, followed by Rs 4,187 crore as contribution towards the International Monetary Fund and African Development Bank. Clearing CST dues of states is seen as one of the key considerations in getting them to speed up the proposed goods and services tax ( GST).

Finance minister Jaitley will meet state finance ministers later in the week to build a consensus on the constitutional amendments needed to facilitate this much-delayed indirect tax reform. GST will replace a plethora of central, state and local levies with one single levy.