ON DECEMBER 9TH Finance Minister Nirmala Sitharaman presented the first set of supplementary grant requests at Lok Sabha. It sought parliamentary approval for additional spending of 3.26 billion. The minister indicated that even this would not be enough and the government would seek parliamentary approval for a further series of additional grants before the end of the financial year. The additional cash outflow is 8.3% of the budgeted expenditure for the year. Sitharaman justified the spending by citing the recession in global economies, both developed and emerging, weakening global trade and geopolitical tensions.
Experts had expected that. “It’s on the expected lines, mainly because of increased allocations for food and fertilizer subsidies,” says Rajani Sinha, chief economist at CARE Ratings. “The net outflow due to additional demand for grants, which is slightly lower than our expectations, is dominated by fertilizer subsidies, food subsidies, payments to oil marketing companies for domestic LPG operations and funds for MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme). In addition, capital spending was increased by some ₹31,000 crore, which should ensure the government meets its annual target. With savings under other headings likely, we do not see the additional demand resulting in a significant breach of the 6.4 budget deficit target % leads. of GDP,” says Aditi Nayar, Chief Economist, ICRA.
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