Parliamentary approval sought for ₹2.81 lakh crore extra spending

New Delhi: The government on Tuesday sought parliamentary approval for gross additional expenditure of ₹2.81 lakh crore for this fiscal year, including higher allocation for fertilisers and food subsidy, defence services, sovereign gold bond, and additional transfer to an Economic Stabilisation Fund aimed at cushioning the economy against global volatility especially the turmoil caused by the Iran war.

The second batch of supplementary demand for grants, tabled by finance minister Nirmala Sitharaman in the Lok Sabha, include a net cash outgo of ₹2.01 lakh crore, while ₹80,145.71 crore of the spending will be met through savings of ministries and departments or through enhanced receipts and recoveries, according to the document.

Officials ruled out any possibility of fiscal slippage.


"At this stage we are comfortable yet cautious, with enough headroom to absorb any external shock," a senior official told ET, adding that the Centre is closely watching the situation and "will take additional measures if the war escalates further".

Experts played down any significant impact on the fiscal deficit, given that a large part of it will be met by savings across ministries.

"We do not expect a material fiscal slippage on this account," said Aditi Nayar, chief economist, Icra. "Although the net cash outgo under the second supplementary demand for grants has been pegged at a sizeable ₹2.0 trillion, this is likely to be offset to a large extent by expenditure savings across ministries."

The Centre has cut total expenditure to ₹49.65 lakh crore in the Revised Estimates for FY26, from ₹50.65 lakh crore. The latest Controller General of Accounts data says the government had spent ₹36.90 lakh crore during April till January. ET reported on February 5 that lower-than-projected fund utilisations by more than a dozen and a half ministries including drinking water and sanitation, housing and urban affairs, and telecommunications are estimated to have resulted in savings of about ₹1.94 lakh crore in the FY26 revised estimates from the budgeted level.

Explaining further, Nayar said the Centre's revenue expenditure needs to expand by as much as 30% year-on-year during February-March 2026 to meet the revised estimates, entailing an incremental amount of ₹2.3 lakh crore.

The Extra Cushion

The additional spending package includes ₹23,641 crore for food subsidy under the Pradhan Mantri Garib Kalyan Anna Yojana, aimed at supporting free foodgrain distribution to eligible households. The government has also sought an additional ₹19,230 crore towards fertiliser subsidies to support farmers and stabilise input costs given any fresh requirement due to the ongoing war.

For FY26, the Centre had increased the fertiliser subsidy amount to ₹1.86 lakh crore in the revised estimate from ₹1.67 lakh crore in the budget estimate. The Centre also demanded ₹26,236 crore in additional expenditure under the proposals for defence services.

It also sought ₹59,085 crore for meeting additional expenditure towards inter-account transfers to Sovereign Gold Bond scheme and under the Economic Stabilisation Fund to keep ₹1 lakh crore aside for any additional requirement.

The demand also had additional allocations of ₹30,116.80 crore for transfers to states for meeting additional expenditure towards Grants in-Aid-General, State Disaster Response Fund Grants, State Disaster Mitigation Fund Grants, Support for Diagnostic Infrastructure to the Primary Healthcare Facilities, Urban Health And Wellness Centres, among others.

In December, the Parliament approved the first batch with gross additional expenditure of ₹1.32 lakh crore, including proposals with a net cash outgo of ₹41,455.39 crore, with ₹18,525 crore on fertiliser and related subsidies and about ₹9,500 crore to compensate oil marketing companies for under-recoveries.