Govt. looks to spend ₹2.35 lakh cr. more

FM tables supplementary demand for grants; net outgo may be ₹1.67 lakh cr; States to get big chunk

The Centre has sought Parliament approval for a gross additional expenditure of ₹2.35 lakh crore, including ₹20,000 crore for recapitalisation of public sector banks, for 2020-21.

Finance Minister Nirmala Sitharaman tabled the first batch of Supplementary Demands for Grants for this financial year in the Lok Sabha on Monday.

Out of the ₹2.35 lakh crore gross additional expenditure, the proposals involving net cash outgo add up to almost ₹1.67 lakh crore. The rest of the money will come either through savings or reallocation of funds allocated to other ministries.

The supplementary demand for grants is needed for government expenditure over and above the amount for which Parliamentary approval was already obtained during the Budget session.

The emergency situation caused by the COVID-19 pandemic means that this year’s supplementary demand includes additional allocations to pay for relief measures announced as part of the Pradhan Mantri Garib Kalyan Yojana in March, and the Aatmanirbhar Bharat stimulus package in May.

The biggest chunk goes towards the State governments, including ₹44,340 crore in post-devolution revenue deficit grants, and ₹2,262 crore as grants-in-aid for the State Disaster Response Funds, in accordance with the interim recommendations of the 15th Finance Commission

MGNREGA gets more

The other large allocation is for the ₹40,000 crore additional funding promised to the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.

The additional funds, which take the scheme’s budget for the year up to ₹1 lakh crore, were announced as a highlight of the Aatmanirbhar package.

The Department of Financial Services has included a sum of ₹20,000 crore “for meeting expenditure towards recapitalisation of public sector banks through issue of government securities”.

The Centre had not allocated any funds for bank recapitalisation in this year’s Budget, but the economic impact of the lockdown led the RBI to announce in July that infusing money into banks had become necessary. The allocation will not involve cash outgo, as the money is being raised through bonds.

The Health Ministry included demands worth ₹6,852 crore for containment of the pandemic, plus additional grants for procurement of materials and machinery, equipping government hospitals, and research.