It all adds up in the end. But a Union Budget expenditure or fiscal deficit projection does not mean much unless you add the subsequent fund raising the Government does during the year.

Also known as Supplementary Grants, the amounts can be large, at Rs 97,904 crore for 2011-12 alone. And only a third of this was the oil subsidy, at least as accounted under this head. The actual oil subsidy bill was ofcourse much higher.

IndiaSpend’s Dhritiman Gupta picks up Union Budget 2012’s total expenditure figures and places them against last year’s Supplementary Grants figures to conclude that the final numbers and thus the fiscal deficit projections could go awry.

Particularly since several expenditure heads under the Supplementary Grants are already inevitable during the course of the year. And not really ‘supplementary’ in the true sense.

Before we go any further, let’s take a look at what Supplementary Demands for Grants are. These are demands for grants that are placed before the Parliament to include all the additional expenditure proposals (higher demands or fresh proposals or re-appropriations) that were not envisaged at the time of formulation of the Budget and have to be incurred in the current year.

Now let’s take a step back. The Union Budget 2011-12 had projected a Fiscal Deficit of 4.6%. The actual number, at 5.9%, was considerably off the mark.

The table below shows last year’s budgeted and actual expenditures.

Budget 2011-12Revised 2011-12
Total Expenditure (1+2)12,57,72813,18,719
Plan Expenditure (1)4,41,5464,26,604
Non-Plan Expenditure (2)8,16,1828,92,115

(Figures in Rs Crore)

The centre overshot its expenditure targets by Rs 60,991crore. Moreover, it failed to spend what it had set aside under planned expenditure thereby saving Rs 14,942 crore. On the other hand, non-plan expenditure shot up sharply, crossing the Budget targets by Rs 75,933 crore.

1st Supplementary Demand For Grants

Now let’stake a look at the two Supplementary Demands for grants.

The First Batch of Supplementary Demand for Grants, consisting of 53 grants, was approved by Parliament in August 2011. This Batch authorised gross additional expenditure of Rs 34,724.5 crore.

Here’s a break-up of the authorised additional expenditure of the Supplementary Demand for Grants.

Plan ExpenditureNon-PlanTotal
GRAND TOTAL16,59618,12734,724
Net Cash Outgo7,3251,6909,016
Technical Supplementary9,27016,43725,707

(Figures in Rs crore)

Of the 'technical supplementary’ expenditure of Rs 25,707 crore, the major heads include loans of Rs 9,003crore to International Monetary Fund (IMF) under 'New Arrangements To Borrow’, additional Central Assistance to Externally Aided Project of Rs 9,000 crore and Ways and Means Advance to State Governments of Rs 3,000 crore.

Of the net cash outgo of Rs 9,016crore, the main items were Rs 2,300 crore for the additional requirement for the Below Poverty Line (BPL) Survey in the Department of Rural Development, Rs 2,370 crore for additional expenditure under the Member of Parliament Local Area Development (MPLAD) scheme, and Rs 1,066 crore for transfer of funds to the National Clean Energy Fund in the Department of Economic Affairs.

Rs 63K Crore In Grants

The Second Batch of Supplementary Demands for Grants for 2011-2012 includes 67 Grants and 1 Appropriation. The Parliament approved gross additional expenditure of Rs 63,180.2 crore in December 2011.

The table below has a breakup of the additional expenditure that was incurred under the Second Supplementary Demand for Grants.

Plan ExpenditureNon-Plan ExpenditureTotal
GRAND TOTAL4,66458,51663,180
Net Cash Outgo2,89553,95256,848
Technical Supplementary1,7674,5626,330

(Figures in Rs crore)

The main items of additional expenditure are; Rs 13,779 crore for subsidy on fertilizers, Rs 2,297 crore for food subsidy and Rs 30,000 crore on providing compensation towards estimated under recoveries to oil marketing companies on account of sale of petroleum products.

Grants Account For 1% of GDP

Therefore, there was an additional expenditure of Rs 97,904crore over what was budgeted in 2011-12. This amounts to 1.07% of the GDP.

While there has been some discussion on an oil subsidy hit on the fiscal, it’s clear from the 2011-12 numbers that the oil subsidy burden is only one-third of the total supplementary grants. While it would be premature to say that the Government could run up an additional bill of Rs 60,000 crore (apart from oil, which is speculated to be around Rs 40,000 cr), it’s fair to say the numbers may be close.

Fiscal Deficit To Increase?

Now Union Budget 2012has projected a Fiscal Deficit of 5.1% and an expenditure Rs.14, 90,924 crore.

Budget 2012-13
Total Expenditure (1+2)14,90,924
Plan Expenditure (1)5,21,025
Non-Plan Expenditure (2)9,69,900

(Figures are in Rs Crore)

If last year’s performance is anything to go by then the above figures will change by the end of the year.

If we assume here that the government efficiently spends the entire amount set aside under Plan Expenditure and at the same time rakes up additional expenditures to the tune of Rs 97,904 crore as it did last year, then the fiscal deficit would be more than the projected 5.1 %.

Disappointing Revenue Collections

The situation looks all the more depressing if we take into account the Tax Collection Record of the Centre the last year.

Budget 2011-12Revised 2011-12
Total Revenue of Centre (1+2)9,40,6749,23,119
Tax Revenue (1)6,69,2326,46,485
Non-Tax Revenue (2)2,71,4422,76,633

(Figures in Rs Cr)

As you can see from the table above, the Revenue Collections of the centre for 2011-12 came in at Rs 9,23,119 crore, which is Rs 17,555 crore less than the budgeted target of 2011-12. The Tax Revenue collections were not up to the mark, falling short by Rs 22,747 crore. The Centre did however performed better as far as the Non Tax Revenues were concerned, with revenues of Rs 2, 76,633 crore.

Budget 2012-13 has given some relief on Direct Taxes it hopes to make up for it through higher Indirect Taxes. The Budget expects total Central revenue collections of Rs11, 11,234crore, of which Rs 77,59,41 crore will come through tax revenues and the remaining through Non- Tax Revenue.

However, if last year’s performance is anything to go by, whether there is a buffer created by strong indirect tax collections or not, the centre could miss its targets.Overruns on the expenditure accounts and under collections on the revenue account may lead to a Fiscal Deficit of more than 6% as against the projected 5.1%.

This is not to say it will happen but it would be good to be prepared.