The Tiff Over Centre's Spending

House panel finds that too much additional mid-year spending compromises the sanctity of Budget numbers.

- JOE C. MATHEW

On December 9, Finance Minister Nirmala Sitharaman presented the first batch of supplementary demand for grants in Lok Sabha. She sought parliamentary approval for additional expenditure of ₹3.26 lakh crore, over and above the ₹39.5 lakh crore earmarked in Union Budget FY23. The minister hinted even this will not be sufficient and government will seek Parliament’s approval for one more batch of supplementary grants before the end of the financial year. The additional cash outgo is 8.3% of budgeted expenditure for the year. Sitharaman justified the expenditure by pointing out recession in global economies, both developed and emerging, weakening global trade and geopolitical tensions.

Experts were expecting this. “It is on anticipated lines, mainly because of increased allocations for food and fertiliser subsidies,’’ says Rajani Sinha, chief economist, CARE Ratings. “Net cash outgo under supplementary demand for grants, which is somewhat smaller than our expectations, is dominated by fertiliser subsidy, food subsidy, payments to oil marketing companies for domestic LPG operations and funds towards MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme). Additionally, capex has been augmented by around ₹31,000 crore, which should ensure that the government meets its annual target. With savings likely under other heads, we do not see the supplementary demand resulting in a meaningful breach of the fiscal deficit target of 6.4% of GDP,” says Aditi Nayar, chief economist, ICRA.