The latest monthly accounts of the government indicate a stagnant and in some cases, slower pace of expenditure compared to last fiscal. According to the CGA (Controller General of Accounts), the government has used slightly above 23 percent of its capex budget. Last year the number stood at 27 percent. Additionally, only 29 percent of the expenditure budget has been used till July end while last year the utilisation stood at almost 35 percent.
In absolute terms the pace of expenditure is stagnant with govt having spent 10 lakh crore, almost the same as last year, that too on a larger budget this year vis a vis last fiscal.
One straight reason for the slower expenditure pace is the government is not having to spend heavily on MNREGA and cash transfers although expanded food subsidy continues under PMGKAY.
There are no cash transfers as a stimulus this year, 50 percent of the MNREGA funds as of July end are still available and pick up in fertilizer subsidy is lower than last year.
Surprisingly even the health expenditure is lower this fiscal, despite the government having sought Parliament nod for additional cash spending of Rs 23,000 crore.
The other reason could be the expenditure caps placed on non-core ministries in Q2, but generally, these do not make a significant dent in the overall expenditure trend of the government.
Although its early days, going by the current trends, barring food and to an extent fertiliser subsidy, the government may either more or less remain within its budget size of Rs 34.83 lakh crore or may not require big additional cash approvals from the parliament.
No wonder, the government’s market borrowings too are comfortable. As per CARE Ratings, total market borrowings
by the centre during April 9-August 27 of FY22 are Rs 5.86 lakh crore, 9 percent less than the Rs 6.46 lakh crore in the corresponding period of FY21 and 49 percent of the budgeted borrowing limit of Rs 12.05 lakh crore for this fiscal.
On the vaccine budget also government officials estimate roughly Rs 5000- 7000 crore as the additional spend. This too could be met by internal savings, just the way the government did during the first supplementary demand for grants.
Despite a devastating second covid wave, the government’s stimulus package of June 28 mainly hinges on loan guarantee schemes. Expansion of the ECLGS and more loan guarantees for health and tourism. This is indicative that even if there is a third covid wave the Centre is unlikely to offer direct cash support to covid affected sectors.
(Edited by : Abhishek Jha)