Government Seeks Additional Spends For Air India, Fertiliser Subsidy, MGNREGA

Janani Janarthanan @Janani Janarthanan

27 Dec 2021, 07:56 PM IST

Indian two thousand rupee banknotes are arranged for a photograph in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

The government has sought parliamentary approval for an additional Rs 3.73 lakh crore in spending for the ongoing fiscal year. The extra funds are being sought for a variety of purposes including equity infusion into Air India's asset holding company, fertiliser subsidies and the rural jobs guarantee program.

According to the supplementary demand for grants tabled in parliament, the additional spend is at Rs 3.73 lakh crore and the net cash outgo is estimated at Rs 2.99 lakh crore. Rs 74,517.01 crore will be matched via savings of the ministries/departments or by enhanced receipts/recoveries, the demand said.

The eventual impact of this spending on the government's planned fiscal deficit of 6.8% of gross domestic product for the year is uncertain and depends on its final account. Aditi Nayar, chief economist at ICRA estimates that some impact on the fiscal deficit is inevitable.

There is near certainty that the fiscal deficit will exceed the budgeted Rs 15.1 lakh crore, despite our assessment that net tax revenues and RBI surplus transfer will together surpass the budget estimate of Rs 1.7 lakh crore.

Aditi Nayar, Chief Economist, ICRA

The Biggest Spends

The largest additional spends by the government include:

Equity infusion into Air India Assets Holding Ltd.: Rs 62,057 crore.
Payment of fertiliser subsidies: Rs 58,430 crore.
Payment of export promotion incentives: Rs 53,123 crore.
Expenditure on food storage / warehousing: Rs 49,805 crore.
The Ministry of Rural Development has been allocated Rs 22,039 crore for infusion into the rural jobs guarantee scheme.
An additional Rs 7,000 crore has been allocated for the Ministry of Urban Affairs and Housing as well.

Increased Outlay For MGNREGA

The increased outlay in the Mahatma Gandhi National Rural Employment Guarantee Act or MGNREGA budget comes at a time when the scheme had run out of funds.

The budget allocated to MGNREGA in FY21 was at Rs 1.1 lakh crore. This was cut by 35% to Rs 73,000 crore for FY22. Accounts available on the MGNREGA website shows that total expenditure on the scheme until Dec. 2 stood at Rs 87,845 crore, including overdue payments worth Rs 9,968 crore.

The additional allocation will help plug the deficit and allow for work to continue over the remaining four months of the fiscal year.