Economy On Track Despite West Asia Crisis, But Fuel & Fertiliser Bills Set To Surge By ₹3 Lakh Crore
"The government, however, does not immediately need to account for additional borrowing or bring in supplementary demands for grants in the upcoming monsoon session of Parliament": Government source
NEW DELH: The Centre is confident that the economy is on the right track this fiscal despite the continuing West Asia crisis, but fuel and fertiliser bills are exerting considerable pressure on the government exchequer. With the West Asia crisis, the government remained forceful to spend more on fuel and fertiliser due to this crisis, as about Rs 3 lakh-crore additional expenditure is foreseen, a top government source said on Tuesday.
The statement from the source came after the Indian economy grew by 7.7 per cent in FY26, when the growth is seen to slow down to 6.6 per cent this fiscal, as per the latest estimate by the central bank. “As of now, the economy remains on track, and there are no signs of stress that we are worried about as India is facing headwinds from external sectors with rising fuel and fertiliser import bills due to the West Asia crisis,” said a top government source.
The source also said that the government had already taken into cognisance about the uncertainties in the global economy around tariffs. "The government, however, does not immediately need to account for additional borrowing or bring in supplementary demands for grants in the upcoming monsoon session of Parliament," it said.
“The government, the source said, wants the reform express to continue and more steps are in the pipeline to increase foreign direct investment (FDI) flows into the economy. “On the fiscal deficit front, the budgeted target of 4.3 per cent of GDP is still intact, and the Centre is actively tapping its non-tax revenue areas like disinvestments and asset monetisation in the current fiscal,” the source said.
As per the source, with prices and supplies of fertiliser impacted, the fertiliser ministry has indicated that it would require an additional 100 per cent of the budget estimate (BE) of Rs 1.71 lakh crore for the fertiliser subsidy this year. The Centre is looking to ramp up domestic production to offset some of this. Besides, the government is in wait-and-watch mode as first quarter GDP data for this current fiscal is yet to come. Once the data of the April-June quarter and the impact of El Nino on the monsoon is available, the government will reassess the macroeconomic data in July,” the source said.
Meanwhile, to ensure that state-owned fuel retailers do not hike prices of diesel and petrol at the pump, they faced under-recoveries of Rs 1.23 lakh crore. “After 78 days of this, the realisation was that this can no longer be supported, and companies were told to increase retail prices. Besides, the GST numbers are robust, frequency data are also showing up, and private investment is picking up pace, as shown in the data released by CII,” the source said.
The government, however, remains hopeful of steady revenue from disinvestments proceeds that have been budgeted at Rs 80,000 crore this fiscal. “For now, the finance ministry is unlikely to table a supplementary demand for grants in the Monsoon session of Parliament. We expect that the government may take a call on the fiscal numbers later in the year, and will then undertake approvals for additional spending,” the sources said.
