The rural development ministry is among the agencies that will see their allocation increase by more than Rs 45,000 crore, with an additional Rs 16,400 crore is proposed to be earmarked for providing additional funds for MGNREGA and another Rs 28,775 crore under other heads.
But the cost of the war in Ukraine is showing its impact on the Centre’s budget as the subsidy bill has shot up significantly. The biggest allocation of Rs 1,09,000 crore has been made for fertiliser — Rs 23,000 crore for phosphatic and potassic (P&K) fertilisers, and over Rs 86,000 crore crore urea.
Similarly, close to Rs 25,000 crore has been allocated for payments to oil companies, including providing gas connections to the poor.
Then, there is an additional spend of Rs 60,000 crore has been proposed due to the Modi government’s decision to extend the Pradhan Mantri Garib Kalyan Anna Yojana until December.
An allocation of Rs 12,000 crore has also been proposed for the railways as capital outlays related to commercial lines, besides more funds being earmarked for defence to meet its requirement for the remaining part of the current financial year.
The higher cash spending is proposed over and above the Rs 39.4 lakh crore that the government had planned to spend during the current financial year as part of finance minister Nirmala Sitharaman’s budget presented in February.
Despite the higher spend, economists and government officials expect the Centre to stick to this year’s fiscal deficit target.
“The total net cash outgo under the supplementary demand for grants, which is somewhat smaller than our expectations, is dominated by fertiliser subsidy, food subsidy, payments to the OMCs for domestic LPG operations, and funds towards NRGEGA. Additionally, capex has been augmented by around Rs 31,000 crore, which should help to ensure that the capex target is achieved. With savings likely under other heads, we do not see the supplementary demands resulting in a meaningful breach of the fiscal deficit target of 6.4% of GDP,” said Aditi Nayar, chief economist at ratings agency ICRA.
What is also expected to help the Centre is higher than budgeted growth in nominal GDP.