The government has created a Rs 1 lakh crore economic stabilisation fund to build fiscal buffers and respond to emergencies such as supply chain disruptions and sectoral shocks, Finance Minister Nirmala Sitharaman informed the Lok Sabha on Friday.
For the Rs1 lakh crore corpus, the government has sought an additional Rs59,000 crore through the second Supplementary Demand for Grants, while the remaining amount will be mobilised through savings.
Defending the government’s move, Sitharaman said supplementary demands are a prudent fiscal response to unforeseen challenges rather than a reflection of poor budgeting.
“The commitment being given in the House for the supplementary grants, including the second Supplementary Demand for Grants, will remain within the fiscal deficit target presented in Parliament on February 1,” she said.
The Lok Sabha on Friday passed the second batch of the Supplementary Demand for Grants for the current financial year. The total supplementary demand, combining the first and second batches, amounts to Rs4.13 lakh crore. Of this, Rs1.71 lakh crore pertains to technical supplementary requirements.
“The technical supplementary requirements are mainly met by utilising savings from one section of a grant to another section within the same grant, or by using additional receipts and recoveries within that grant,” Sitharaman said.
Under the second supplementary demand, the government has sought Parliament’s approval to spend an additional Rs2.81 lakh crore. The additional net cash outgo has largely been sought to meet higher expenditure on fertiliser subsidy, food subsidy and defence services, among other commitments.
Highlighting India’s preparedness to deal with the evolving geopolitical situation, the finance minister said Rs57,382 crore has been earmarked for the economic stabilisation fund to ensure fiscal headroom to respond to global economic headwinds.
“The proposed economic stabilisation fund will provide fiscal space for India to respond to global headwinds such as recent crises, unanticipated supply chain disruptions, and unexpected shocks to sub-sectors in the Indian economy,” she said, adding that the allocation will come partly from existing appropriations and partly through additional allocations.
Sitharaman also assured that the government is preparing to tackle challenges arising from supply chain disruptions, including those related to fertilisers and LPG supplies.
“There will be no shortfall in fertiliser subsidy for farmers. An additional Rs19,230 crore has been allocated towards fertiliser subsidy,” she said.