Context:
The Government requested Parliamentary approval for gross additional expenditures of ₹6.79 trillion and a total net cash outgo of ₹51,463 crore. Most of this expenditure will be completely offset by savings not exceeding ₹6.27 trillion from other ministries, and the resultant enhanced receipts and recoveries will ensure that there is no impact on the fiscal deficit.
So as to provide the possibility of absorbing such savings where a new service or instrument is involved, a token provision of ₹6,700,000 has also been incorporated.
Expenditure?
Expenditure is the act of spending money on goods, services, or activities. It can also refer to the total amount of money spent.
How is expenditure recorded?
- Expenditure is recorded at the time of purchase.
- An accountant or bookkeeper records an expenditure by showing proof of the sale, such as a sales receipt or invoice.
Allocations Behind Any Additional Spending
Over and above 85% of the total net cash outgo, other spending allocations include:
- Fertiliser Subsidy: ₹12,000 crore for the Department of Fertilisers.
- Unified Pension Scheme (UPS): ₹7,000 crore under the overall limit of ₹13,449 crore allocated for pensions.
- Telecom and Defence: Noteworthy allocations for telecom and defence related pensions.
The first supplementary grant already provided for a net cash outgo of ₹44,123 crore earlier in FY25.
Fiscal Impact and Government Strategy
- The nominal GDP estimate has been revised upwards by 2.1% and has created some fiscal room for the economy, which has helped in restraining the fiscal deficit to GDP ratio currently at 4.8% for FY25.
- Such additional spending, though, will push up the fiscal deficit number beyond the revised estimate of ₹15.7 trillion, although analysts expect the deficit to remain at around 4.7% of GDP.
Fiscal Outlook
- Aditi Nayar (ICRA) opines that savings in expenditure from other ministries will provide a cushion to contain the total government spending from going out of control in FY25.
- The revised target for fiscal deficit is still well placed due to higher revenue collection and controlled expenditure in other areas, despite the fresh outgo.
The second supplementary demand for grants signifies the Government’s strategic approach toward managing fiscal preferences, maintaining allocations of utmost priority while keeping a perspective of general fiscal discipline.
