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Didn’t underestimate spending provisions in Budget: FM Sitharaman

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Union Finance Minister Nirmala Sitharaman on Monday said the additional expenditure consent sought by the Centre from Parliament through Supplementary Demand for Grants this year was around 9.6 per cent of the 2021-22 Budget size of Rs 34.8 trillion. This compares to 8.6 per cent during the time of the Manmohan Singh government in 2011-12, she said, adding that the Centre did not under-provision in the Budget.


Replying to the debate on the second Supplementary Demand for Grants and the Appropriation Bill in the Lok Sabha, Sitharaman said the Centre was seeking legislative nod to spend Rs 2.99 trillion extra because of issues such as the Air India sale and the rise in global fertiliser prices, which led to a sharp increase in fertiliser subsidy burden this year.


“Many members have asked if the demand this time is so high because we underestimated in Budget Estimates (BE)? The big-ticket expenditure items include Air India. Also, at a time when we are very sensitive to farmers and their concerns, we have to ensure that they don’t suffer because of the rise in global commodity prices. And therefore, an increase in the subsidy for fertiliser has been provided, which itself is accounting for Rs 58,430 crore,” Sitharaman said.


Sitharaman said in 2011-12, 8.6 per cent of BE was raised through supplementary demands. “In 2021-22, given the measures taken during the second wave, and the extension of the food subsidy programme, and also reduction in the fuel price, which will lead to revenue foregone, and the fertiliser subsidies, our additional demand so far, put together is 9.6 per cent,” she said.


The Lok Sabha cleared the second Supplementary Demand for Grants through voice vote, of around Rs 3.73 trillion, out of which Rs 2.99 trillion is the additional outlay and the remaining will be drawn from savings elsewhere. The extra spending includes infusion of over Rs 62,000 crore into the company that holds residual assets and liabilities of Air India, Rs 58,430 crore by way of additional fertiliser subsidy, Rs 53,123 crore towards payment of pending export incentives and Rs 22,039 crore to the rural development ministry for transfer to the National Rural Employment Guarantee Fund.




On the issue of inflation, the minister said the government was proactive in taking measures to cool down prices of edible oil and other essential commodities. “We are taking measures through the EGOM (Empowered Group of Ministers) for taking care of essential goods. We will attend to the problem of edible oil price and also some of the essential edible items,” she said.


On the states’ financial position, Sitharaman said in April-November, the Centre had transferred 86.4 per cent of the full year’s funds. “We are providing funds from the National Disaster Response Fund (NDRF) and an extra Rs 15,000 crore for emergency Covid-19 response. The financial position of the states is also reflected in the fact that the overall cash balance of states as of November 30, 2021, was Rs 3.08 trillion approximately, a fairly comfortable position,” she said.


Out of 28 states, the FM said, only two had a negative cash balance.


The additional spending requirement all but confirms that meeting the fiscal deficit target of 6.8 per cent of GDP will be a very tall task for the government.

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Union Finance Minister Nirmala Sitharaman on Monday said the additional expenditure consent sought by the Centre from Parliament through Supplementary Demand for Grants this year was around 9.6 per cent of the 2021-22 Budget size of Rs 34.8 trillion. This compares to 8.6 per cent during the time of the Manmohan Singh government in 2011-12, she said, adding that the Centre did not under-provision in the Budget.


Replying to the debate on the second Supplementary Demand for Grants and the Appropriation Bill in the Lok Sabha, Sitharaman said the Centre was seeking legislative nod to spend Rs 2.99 trillion extra because of issues such as the Air India sale and the rise in global fertiliser prices, which led to a sharp increase in fertiliser subsidy burden this year.


“Many members have asked if the demand this time is so high because we underestimated in Budget Estimates (BE)? The big-ticket expenditure items include Air India. Also, at a time when we are very sensitive to farmers and their concerns, we have to ensure that they don’t suffer because of the rise in global commodity prices. And therefore, an increase in the subsidy for fertiliser has been provided, which itself is accounting for Rs 58,430 crore,” Sitharaman said.


Sitharaman said in 2011-12, 8.6 per cent of BE was raised through supplementary demands. “In 2021-22, given the measures taken during the second wave, and the extension of the food subsidy programme, and also reduction in the fuel price, which will lead to revenue foregone, and the fertiliser subsidies, our additional demand so far, put together is 9.6 per cent,” she said.


The Lok Sabha cleared the second Supplementary Demand for Grants through voice vote, of around Rs 3.73 trillion, out of which Rs 2.99 trillion is the additional outlay and the remaining will be drawn from savings elsewhere. The extra spending includes infusion of over Rs 62,000 crore into the company that holds residual assets and liabilities of Air India, Rs 58,430 crore by way of additional fertiliser subsidy, Rs 53,123 crore towards payment of pending export incentives and Rs 22,039 crore to the rural development ministry for transfer to the National Rural Employment Guarantee Fund.


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On the issue of inflation, the minister said the government was proactive in taking measures to cool down prices of edible oil and other essential commodities. “We are taking measures through the EGOM (Empowered Group of Ministers) for taking care of essential goods. We will attend to the problem of edible oil price and also some of the essential edible items,” she said.


On the states’ financial position, Sitharaman said in April-November, the Centre had transferred 86.4 per cent of the full year’s funds. “We are providing funds from the National Disaster Response Fund (NDRF) and an extra Rs 15,000 crore for emergency Covid-19 response. The financial position of the states is also reflected in the fact that the overall cash balance of states as of November 30, 2021, was Rs 3.08 trillion approximately, a fairly comfortable position,” she said.


Out of 28 states, the FM said, only two had a negative cash balance.


The additional spending requirement all but confirms that meeting the fiscal deficit target of 6.8 per cent of GDP will be a very tall task for the government.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

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