New Delhi: The Union finance ministry on Thursday sought Parliament's permission to spend additional cash of Rs 85,315 crore in FY18. Some 70 per cent of additional spending will go towards compensating states for revenue loss suffered post the GST roll-out. This extra spending is unlikely to impact the country’s fiscal deficit target for 2017/18 as India had raised the target to 3.5 per cent of GDP from 3.2 per cent earlier.
The additional expenditure is being incurred to match the revised estimates provided in the Budget. Arjun Ram Meghwal moved the fourth batch of Supplementary Demands for Grants for FY18 in the Lok Sabha. The spending would include Rs 62,700 crore compensation to the state governments and union territories following the launch of GST in July last year, and Rs 9,260 crore for pension payments to the armed forces.
Another major spending head is Rs15,065.65 crore towards grants in aid and creation of capital assets under various schemes. As per the supplementary demands for grants, the gross additional expenditure would be over Rs 9.06 lakh crore and this would be matched by over Rs 8.21 lakh crore savings by various ministries and departments. The net cash outgo from the exchequer would aggregate to Rs 85,315.30 crore, as per the finance ministry document.
“A substantial part of the net cash outgo proposed under the Fourth Batch of Supplementary Demands for Grants, 2017-2018 appears to be technical in nature, led by the transfer of GST compensation cess receipts into the non lapsable GST Compensation Fund in the public account. This is likely to be a contra entry, with no net impact on the revenue or the fiscal deficit,” said Aditi Nayar, principal economist at Icra.
Therefore, she said, the net impact of the Fourth Supplementary on the FY18 fiscal deficit may be limited to below Rs 24,000 crore. “Nevertheless, this remains a source of some concern, given that the Government of India’s fiscal deficit had stood at Rs 6.8 trillion in ten months of FY18, overshooting the revised estimate of Rs 5.9 trillion,” added Icra.