Govt seeks Parliament approval for ₹2.7 lakh cr additional spending in FY23

The central government has sought Parliament’s approval for additional expenditure of ₹2.7 lakh crore during the current year (2022-23). Almost 73% of this will go towards the fertiliser subsidiary, defence pensions, transfers to the Universal Service Obligation Fund (USOF) and GST compensation.

The second batch of Supplementary Demands for Grants for 2022- 23 laid before Parliament on Monday includes 73 grants and 3 appropriations. Of the gross additional expenditure of ₹2,70,508.89 crore for which approval is sought, ₹1,22,374.37 crore will come as savings of the ministries/departments or by enhanced receipts/recoveries. The proposed net additional cash outgo is ₹1,48,133.23 crore.

“Although a portion of the net cash outgo of ₹1.5 trillion may be offset by savings under other heads, it has raised the likelihood of a modest slippage relative to the revised estimate of the FY2023 fiscal deficit of ₹17.6 trillion. Regardless, bond yields are likely to take a cue from global yields and the expectations of monetary tightening at the upcoming policy review," said Aditi Nayar, chief economist, head - research & outreach, ICRA Ltd.

Under the fertiliser subsidy component, ₹10,000 crore is sought for payment towards indigenous P&K subsidy and ₹11,000 crore to subsidise imported P&K subsidy. In the case of subsidy for the imported subsidy, ₹6,000 crore is meant to recoup the advance already sanctioned from the Contingency Fund of India. Additionally, ₹8,853.91 crore is sought for payment towards indigenous urea subsidy and ₹6,471.45 crore for imported urea subsidy (which includes ₹4,000 crore or recoupment of advance sanctioned from the Contingency Fund of India).

Of the ₹33,718.49 crore sought towards defence pension payments, ₹24,465.57 crore is meant for payment of the arrear component of One Rank One Pension(OROP) for the Army. The government has sought approval to transfer ₹2,350.16 crore and ₹1,321.76 crore respectively for Air Force and Navy for the same purpose.

The additional amount sought by the Finance Ministry is meant for transfer to the GST Compensation Fund and additional release of GST compensation to states (₹29,616.82 crore). In the case of the department of telecommunication, ₹25,000 crore is sought towards transfers to Universal Service Obligation Fund (USOF).