Supplementary Grants Set to Boost Funding for Essential Sectors and Rural Employment

Supplementary Grants Set to Boost Funding for Essential Sectors and Rural Employment

The upcoming winter session of Parliament, set to commence on December 4, is poised to witness Supplementary Demands for Grants (SDG) that may involve increased allocations for fertilizer, food, and fuel subsidies, alongside the Rural Employment Guarantee Scheme. While it is anticipated that there won’t be a significant fresh cash outflow, the SDG is expected to be presented with provisions for additional funds.

A senior government official stated, “Funds have been allocated for subsidies and the rural employment guarantee scheme through the contingency fund, with the condition that they will be regularized through the parliamentary process. We not only anticipate these regularizations but also expect additional allocations through the SDG.” Having concluded budget discussions with various central ministries and departments, the Finance Ministry is now well-informed about the additional fund requirements and potential sources.

The official further clarified, “We do not foresee a substantial fresh cash outflow in the SDG, which means there is no threat to the budget estimate of the fiscal deficit, currently at 5.9 percent of GDP.” The SDG, in this context, refers to the statement of supplementary demands presented to Parliament, indicating the estimated additional expenditure necessary for a financial year beyond the initially authorized expenditure.

Three categories of supplementary grants are outlined: token, technical, and substantive/cash. Token grants are symbolic amounts, often around ₹1 lakh, allocated for various schemes. Technical grants involve repurposing savings from one ministry or department for a different purpose or a scheme requiring additional funds. Substantive/cash grants imply fresh allocations beyond the budget, funded through a new withdrawal from the Consolidated Fund of India.

With a budget size exceeding ₹45 lakh crore for the fiscal year 2023-24, over 47 percent has already been spent in the first half. While there has been a notable increase in capital expenditure, certain subsidies, such as the Nutrient-Based Fertilizer Subsidy and Urea Subsidy, have already reached 96 percent and 52 percent, respectively, in the first six months. The Cabinet has approved additional expenditures exceeding ₹22,000 crore, likely to be provisioned through the SDG.

Concerns are raised regarding the petroleum subsidy, initially pegged at ₹2,257 crore, primarily for the Ujjwala LPG scheme. With the government approving an additional 75 lakh connections under the scheme and an extra ₹100 subsidy for Ujjawala customers, there may be a need for more funds. Furthermore, oil marketing companies, responsible for a ₹200 price cut on each domestic LPG cylinder, might seek assistance. Another area requiring additional allocation is the free food grains scheme.

Expectations also include increased funds for the Mahatma Gandhi National Rural Employment Guarantee Scheme, which was initially allocated ₹60,000 crore, with an additional ₹10,000 crore provided. Currently, around ₹2,000 crore remains, and an additional demand of ₹40,000 crore is anticipated, according to another government official.