Nirmala seeks Parliament nod for ₹21,246 crore additional spending

In the first batch of Supplementary Demands for Grants for the current fiscal, Finance Minister Nirmala Sitharaman on Thursday (November 28) sought the Parliament’s approval for an additional expenditure of ₹21,246.16 crore, including over ₹8,820 crore in the union territories of Jammu & Kashmir and Ladakh.

The first batch of Supplementary Demands for Grants for the financial year 2019-20 was tabled in both the Houses of Parliament on Thursday. Sitharaman said of the total spend, cash outgo will be about ₹19,000 crore. The government has sought ₹8,820.62 crore as grants for union territories Jammu & Kashmir and Ladakh in lieu of the erstwhile state’s share of 14th Finance Commission Award.

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Another ₹4,557 crore will be infused in the IDBI Bank through recapitalisation bonds, while ₹2,500 crore will go into recapitalsation of state-owned insurance companies. The Union Budget for FY20, presented in July, had estimated a total government spending of ₹27.86 lakh crore, excluding expenses of public-sector companies.

The finance minister sought ₹1,500 crore to meet the additional expenditure towards payment of pay and allowance of armed forces and another ₹666 crore for meeting expenditure of Department of Space. As much as ₹3,387.46 crore has been provided in the supplementary demands for grants for meeting expenditure towards salaries and cost of the ration of police.

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About ₹1,000 crore has been sought for providing additional funds under the scheme for free LPG connection to poor households. A sharp cut in corporate tax rates and lackluster growth in goods and services tax collections, amid a marked downturn in the economy, have squeezed government finances this year.

The Indian economy expanded by 5% in April-June, its slowest annual pace since 2013 and the projections are that it may have slowed down further in the second quarter, making six consecutive quarters of slowing growth, a first since 2012. This despite a recent series of fiscal stimulus, including a reduction in corporate tax rates.

Growth outlook has weakened sharply this year, with a crunch that started with the non-banking finance institutions spreading to retail businesses, car-makers, home sales and heavy industries. So far, the government has maintained that it will stick to the fiscal deficit target of 3.3% of GDP for 2019-20 and has no plans to revise it.

(With inputs from agencies)