LOK SABHA on Wednesday cleared the first Supplementary Demands for Grants enabling the government to spend an additional gross amount of Rs 21,246.16 crore in the current financial year, with net cash outgo at Rs 18,995.51 crore. Over 40 per cent of the additional gross amount has been sought as grants for the newly formed Union Territories of Jammu & Kashmir and Ladakh. The Union Budget presented in July for this financial year had estimated a total of Rs 27.86 lakh crore as government expenditure, excluding public sector company expenses.
The Rs 8,820.62 crore funds as grants for Jammu & Kashmir and Ladakh in lieu of the erstwhile state’s share of the 14th Finance Commission Award includes the share of revenue deficit grant (Rs 5892.50 crore), local body grant (Rs 725 crore) and SDRF (Rs 139.50 crore) and state share of net proceeds of taxes for November and December (Rs 2063.62 crore).
Finance Minister Nirmala Sitharaman, responding to the discussion in the Lok Sabha, said authorisation for additional spending on both revenue and capital side has been sought. She said the government has also sought funds for infusing more equity into IDBI Bank and state-owned general insurance companies.
Responding to Opposition’s criticism that there is fear among investment community especially foreign investors, she said foreign direct investments flows have risen to $20.9 billion in first half of current year, as compared to $17 billion in the first half of previous financial year — reflecting confidence among investor community.
An amount of Rs 4,557 crore will be infused in the IDBI Bank through recapitalisation bonds, while Rs 2,500 crore will be used for recapitalsation of state-owned insurance companies. Sitharaman said this equity infusion is being done to maintain solvency of the general insurance companies. Fund infusion in IDBI Bank is being done to enable it to come out of the RBI’s Prompt Corrective Action framework.
She said public sector banks have extended record credit in the month of October and November and there is no shortage of credit availability in the economy.
“Total support sanctioned by PSBs in the form of credit to (including co-origination and on-lending) and pool buyouts from NBFCs since the IL&FS default in September 2018 till November 2019 has risen to Rs 4.23 lakh crore, including pool-buyouts of Rs 1.24 lakh crore. PSBS being adequately capitalised and record recovery underway, have sufficient liquidity to support credit growth,” the Finance Ministry said in a statement.
Apart from increasing credit MSMEs, NBFCs and housing sector, the government has increased allocation under national rural employment guarantee scheme over the years, the minister said. Transfer of funds under government schemes is being done through the Direct Benefit Transfer to curtail leakage. The government sought Rs 2,000 crore to meet the additional expenditure towards payment of pay and allowance of armed forces and another Rs 666 crore for meeting expenditure of Department of Space.