The government doesn’t foresee a major net cash outgo in the upcoming first batch of supplementary demands for grants for this fiscal year and the interim budget for FY25 will be “realistic” in its projections, a senior official said on Wednesday.
With the finance ministry’s series of meetings with various ministries on revised expenditure outgo coming to an end on Tuesday, the government now expects to meet its FY24 fiscal deficit target of 5.9% of gross domestic product (GDP), he said.
Overall revenue collections are expected to remain robust this fiscal, while additional outgo under some programmes or heads could be significantly offset by savings in others and reprioritisation of expenditures, he said.
The government had budgeted total expenditure at Rs 45 lakh crore for FY24, while its tax and non-tax revenue was pegged at Rs 26.3 lakh crore.
The government is sticking to its budgeted FY24 nominal GDP growth rate (10.8% upon the revised base) for now, he said, indicating that any change in the pace of expansion is unlikely to disrupt the fiscal deficit ratio target.
“As of today, we don’t see major cash outgo (in supplementary demands for grants for FY24),” he said.
The government will present an interim budget for FY25 in February, leaving the full budget to the next government after elections a few months after that.
Capex outlay
The government is focussed on containing its fiscal deficit at the targeted level of 4.5% of GDP by FY26, the official said, hinting at the alignment of the pace of expenditure hike in coming years with the fiscal glide path.
The budgetary capex outlay, which has been hiked sharply in the range of 24-39% since FY22 due to its high multiplier effect, isn’t yet firmed up for FY25, he added.
Supplementary demands
Apart from the additional outgo on the rural employment guarantee scheme this fiscal, the food subsidy bill is likely to breach the budget estimate of Rs 1.97 lakh crore, he said, thanks to an extension of the free ration scheme beyond the December quarter and the hike in benchmark crop prices.
Any rise in the fertiliser subsidy from the budgeted Rs 1.75 lakh crore, the official said, would hinge on two factors—gas prices and cost of imports. Prime Minister Narendra Modi has also announced the launch of a scheme to offer relief in bank loans to the urban middle class. However, the outgo on such an account is unlikely to be substantial this fiscal with only a few months to go.
The government will present the first batch of supplementary demands for grants in the next session of Parliament.
Last fiscal, the government had sought clearance for an additional net expenditure of as much as Rs 3.26 lakh crore in its first batch of supplementary demands for grants. This was because the FY23 budget calculations went haywire after the Ukraine war had broken out unexpectedly, causing a spike in commodity prices and substantially inflating the government’s subsidy bill.