Struggling to keep the fiscal deficit contained at the revised target of 3.4 per cent of the GDP, the Union Ministry of Finance, once again, is likely to use loans from the National Small Savings Fund (NSSF) to pay the food subsidy bill for the 2018-19 fiscal.
“This year, the collection under NSSF is better, giving us the confidence to use some surplus as a loan to settle the food subsidy bill,” said a senior finance ministry official.
However, he did not specify how many loans the government would be using.
“So far, the numbers are not decided. By the end of this month, there would be clarity on how much we can lend,” the official said.
This is not a new trend. The government had used Rs 40,000 crore as loan from NSSF in FY 2017-18 to pay Food Corporation of India earlier too, which helped it to bring down food subsidy and finally helped in meeting the fiscal deficit target of 3.5 per cent for the year, which otherwise could have gone up further.
Similar diversion was used in FY 2016-17, where Rs 25,000 crore of food subsidy bill came from NSSF loan.
This year, the government has revised the estimate for allocation under food subsidy to Rs 1.71 lakh crore from Rs 1.69 lakh crore last year. The government may take another loan, which will help it stick to the 3.4 per cent fiscal deficit target.
The latest data from the Controller General of Accounts (CAG) showed that the Central government’s fiscal deficit for April-January FY19 touched Rs 7.708 lakh crore or 121.5 per cent of the full-year target. The government will need fiscal surplus of about Rs 1.10 lakh crore in the last two months to meet the revised fiscal deficit target of 3.4 per cent for the year, data showed.
Even as the tax collection remains much below expectation, the government is resorting to all sorts of measures to stick to the target. Recently the finance ministry approved a ‘special banking arrangement’ for Rs 10,000 crore for fertiliser subsidies as it exceeded the fertiliser subsidy bill by Rs 12,000 crore.
The CAG report for FY17 has already flagged how the Centre is using off-balance sheet financing model for deferring another budgetary outgo such as fertiliser subsidies/arrears through special banking arrangements; food subsidy bills/arrears of Food Corporation of India through borrowings from NSSF/banks etc.