Govt seeks Parliament nod for Rs 25,500 crore extra spending to help PSBs beat NPA blues

NEW DELHI: NEW DELHI: The government has proposed additional net spending of Rs 25,500 crore in the current financial year to set aside more funds for banks, infusing capital into national carrier Air India, building infrastructure for strategic oil reserves and providing funds for some social schemes to counter sharp criticism over cut in spending.

The gross additional spending is pegged at Rs 40,822 crore, of which Rs 15,326 crore will be met from savings, the government said in the first supplementary demand tabled in Parliament on Friday. The minister of state for finance Jayant Sinha said the government’s fiscal position is comfortable and this additional spending will not adversely impact fiscal deficit.

The additional spending will be over and above the Rs 17.77 lakh crore expenditure provided in the budget for 2015-16.

Nearly half of the net additional allocation, or Rs 12,010 crore, is for capitalising staterun banks that are battling ballooning non-performing assets or NPAs. Of this additional allocation, Rs 100 crore is for equity for Mudra Bank. The governemtn has also provided Rs 500 crore for a Credit Guarantee Fund for providing guarantee to loans extended under Pradhan Mantri Mudra Yojana.

“Bank recapitalisation plan is comprehensive. We have put in four years’ plan to push growth and tackle NPA,” finance minister Arun Jaitley said while presenting the supplementary demand.

The Modi government was forced to cut central spending on welfare schemes after the 14th Finance Commission recommended higher share to states in central taxes.

Higher spending by states was to compensate for this cut. The government has sought to address that issue through Rs 4,000 crore allocation for Maneka Gandhi-led ministry of women and child development. The bulk of this sum, Rs 3,218 crore, is for the Integrated Child Development Service. PM Modi’s pet project Swachh Bharat Abhiyan will get Rs 1,750 crore out of the total Rs 2,685 crore set aside by the ministry of drinking water and sanitation.