Air India will be biggest cash guzzler with close to Rs 67,000 crore earmarked towards it. The second supplementary demand for grants tabled in Parliament has proposed over Rs 62,000 crore for equity infusion in Air India Assets Holding Company for repayment of past borrowings, guarantees and lease rental as part of the clean up exercise along with the disinvestment of the national carrier. Another Rs 2,600 crore has been proposed for loans and advances to Air India for recouping loans from the Contingency Fund of India. And, Rs 2,111 crore is planned to be earmarked for taking care of medical benefits of employees, operations, and to cover cash losses.
Apart from Air India, finance minister Nirmala Sitharaman has also proposed additional spending of Rs 58,430 crore towards fertiliser subsidy, which the government had announced earlier.
Another Rs 53,122 crore has been earmarked for clearing the dues of exporters, which was again announced earlier but budgetary provision had not been made.
Similarly, close to Rs 50,000 crore is meant for expenditure towards various schemes of food storage and warehousing.
While tax revenues have been buoyant in recent months, both on the direct and indirect taxes side, the government is staring at a shortfall on the disinvestment front as some of the planned strategic sale transactions may not go through. If the current trend continues, the Centre will actually close the year with higher-than-budgeted tax collections.
Higher spending, as some officials had warned, may blunt some of the revenue advantage although the government is trying to ensure that it sticks to the fiscal deficit target of 6.8% of GDP for the current year, even as some economists expect the target to be breached.
“At end-October 2021, 52% of the full year expenditure target had been completed, and a portion of the higher than expected net cash outgo of Rs 3 trillion (Rs 3 lakh crore) in the second supplementary demand for grants will need to be absorbed through savings in other demands, to curtail the impact on the fiscal deficit. Nonetheless, there is near certainty that the fiscal deficit will exceed the budgeted Rs 15.1 trillion (Rs 15.1 lakh crore), despite our assessment that net tax revenues and RBI surplus transfer will together surpass the budget estimate by Rs. 1.7 trillion (Rs 1.7 lakh crore),” Aditi Nayar, chief economist at ICRA, said.
