Revenue ‘sufficient enough’ to fund extra expenditure of Rs 3.26 trillion: Finance Minister- QHN

Union Finance Minister Nirmala Sitharaman exuded confidence that tax revenue generation in the current fiscal year (FY23) would be sufficient to fund the additional spending of Rs 3.26 trillion, for which her ministry has sought Parliamentary approval.

Replying to the debate on Supplementary Demand for Grants in the Rajya Sabha on Wednesday, Sitharaman refuted the Opposition’s claims that the Centre was not well prepared for global headwinds and said that the budgetary expenditure assumptions were made before the war in Ukraine and its impact on food and commodity prices.

“The revenue that we are generating is sufficient enough to pay for the additional expenditure. Gross tax revenue collections in the first half of the year (April-September) were up 18 per cent year-on-year which is substantially higher than the Budget growth assumption of 9.6 per cent for FY23,” Sitharaman said.

“There is enough revenue buoyancy, which gives me the confidence that we will be able to fund this supplementary demand for grants. That is reinforced by the announcement in September that the Centre will stick to the borrowing plans for the year,” she said.

The Finance Ministry has sought Parliament’s approval for additional gross spending of Rs 4.36 trillion in FY23 through the first tranche of supplementary demands for grants. While net cash outgo is pegged at Rs 3.26 trillion, the rest will be matched by savings or enhanced receipts.

The additional spending demands are dominated by fertiliser subsidy, food subsidy, payments to oil marketing companies (OMCs) for domestic LPG operations, and funds towards the rural job guarantee scheme.

Sitharaman said that all Budget assumptions were made before the war, and once commodity and food prices spiked, the government had to provide for food and fertiliser subsidies.

“The items under which we have come with supplementary demand ensure that the poor and farmers are given enough support,” she said.

Sitharaman said that the current supplementary demand was 8 per cent of total FY23 Budget size of Rs 39.4 trillion, against 19 per cent of the FY21 Budget in the pandemic year and 20 per cent of the FY09 Budget amid the global financial crisis.

The finance minister said the government is keeping an eye on inflation which is purely “extraneous” nowadays because of fuel and fertiliser prices, and that wholesale inflation has fallen to a 21-month low.

Later, the Rajya Sabha returned the Supplementary Demands for Grants to the Lok Sabha, thus completing the process of authorising the government to spend an additional Rs 3.25 trillion in FY23.

Retail inflation based on the consumer price index, which remained above the Reserve Bank’s tolerance level of 6 per cent since January this year, declined to 5.88 per cent in November.

The finance minister also informed the House that gross NPAs of banks have declined to a six-year low of 5.9 per cent in March 2022. She also said the government’s targeted approach to deal with the Covid impact has helped India revive growth without going into a recession.