New Delhi: Finance minister Arun Jaitley on Monday sought parliamentary approval for gross additional expenditure of Rs66,113 crore, which includes funds for payment of urea subsidies and meeting additional demands for the national job guarantee scheme, through a second supplementary demand for grants.
However, the net cash outgo from the exchequer will be Rs33,380 crore as the rest will be met through departmental savings or enhanced receipts. Most of the expenditure is under the head of revenue expenditure (Rs31,507 crore) while only Rs1,873 crore is earmarked for capital expenditure.
Interestingly, the government did not allocate money for bank recapitalization bonds, indicating a decision is yet to be taken on the timing of its implementation.
N.R. Bhanumurthy, professor at the National Institute of Public Finance and Policy, said the fiscal deficit target of 3.2% of GDP for 2017-18 may face some risk after the second supplementary demands for grants. “It will all depend on the overall revenue generation in the current fiscal and the timing of issuance of the bank recapitalization bonds,” he added.
Jaitley has already indicated that while fiscal consolidation will continue, the glide path of reaching 3% (of GDP) fiscal deficit by 2018-19 may need to be revisited given the uncertainty regarding revenue collections after goods and services tax (GST) was implemented on 1 July.
For meeting expenditure to clear liabilities towards urea freight subsidy and writing off the loans and waiver of interest in respect of three state-owned fertiliser companies, government provided Rs20,532.5 crore. Under the Mahatma Gandhi National Rural Employment Guarantee scheme, government provided Rs3,595 crore to meet additional demand this fiscal.
The finance ministry on 27 July had sought Parliament’s approval for an additional expenditure of Rs11,166 crore for 2017-18 as part of the first batch of supplementary demands for grants. Of the additional expenditure, the net cash outgo is Rs10,647.45 crore while the rest will be met through savings or enhanced receipts by government departments.
The winter session of Parliament, from 15 December to 5 January, will have 14 sittings.
The finance ministry had sought proposals from departments and ministries for the second batch of supplementary demands for grants for 2017-18 by 31 October.
Departments have been asked to try and meet their additional funding requirements through internal savings first and seek only the minimum requirement unless they have been specifically asked to move supplementary demands for grants.
The finance ministry has started the budget-making exercise for the fiscal year starting 1 April with the release of the budget circular containing the timelines for submission of information by various departments. Ministries and departments were asked to submit tentative budget estimates for fiscal 2019 by 30 September. The budget is expected to be presented on 1 February like last year.
Jaitley has indicated that the big focus of next year’s Union budget will be spending on infrastructure and the rural sector.
While spending on infrastructure would help revive investment, the extra focus on the rural sector will help alleviate prolonged rural distress—a politically sensitive subject. Since the 17th general election is scheduled for 2019, the Union budget for 2018-19 will effectively be the last one to be presented by the Bharatiya Janata Party (BJP)-led National Democratic Alliance in its current term in office.