The government on Friday sought parliamentary nod for spending an additional R30,804 crore on fuel subsidies and equity infusion in the loss-making Air India.
The supplementary demand for grants, by finance minister P Chidambaram in Lok Sabha, outlines a gross additional expenditure of R32,119.5 crore but promised to keep the Centre's gross market borrowing within the budgeted R5.7 lakh crore for 2012-13.
Of the gross additional expenditure, the net cash outgo or net spending will be R30,804 crore, while the remaining R1,315.5 crore will be met through savings in other heads.
The government has made provisions for an additional R28,500 crore for compensating oil marketing companies for under-recoveries in the sale of subsidised petroleum products. This means, the total funds, including the additional amount, for oil subsidies would touch R72,260 crore for this fiscal.
Another R2,000 crore has been provided for infusing equity in the financially-troubled Air India. A small amount has also been sought to discharge the government's liability towards International Monetary Fund (IMF).
All eyes are now on whether the government will meet even the revised fiscal deficit target (of 5.3% of GDP) for this fiscal, as against the budgeted 5.1%.
During April-September 2012 (the first half of 2012-13), the fiscal deficit jumped to R3.37 lakh crore, which itself was 65.6% of the budget estimate, while the government's borrowings in the first half ending September 30 has already touched R3.7 lakh crore -- or 65% of the total budgeted borrowing plan.
Referring to the poor response to the 2G spectrum auction and the disinvestment plan as well as lower revenue buoyancy, many experts predicted that the fiscal deficit will be around 6% of GDP. This means, there could be additional borrowings worth over R50,000 crore.