New Delhi: The government on Friday sought Parliament’s nod to infuse over Rs 62,000 crore into the company that holds residual assets and liabilities of Air India after its privatisation, as part of over Rs 3.73 lakh crore additional spending planned in the current financial year.
The extra spending would include Rs 58,430 crore by way of additional fertiliser subsidy, Rs 53,123 crore towards payment of pending export incentives and Rs 22,039 crore to rural development ministry for transfer to National Rural Employment Guarantee Fund.
Minister of State for Finance Pankaj Chaudhary tabled the second batch of supplementary demands for grants in the Lok Sabha envisaging a net cash outgo of over Rs 2.99 lakh crore and Rs 74,517 crore extra expenditure would be matched by savings by different ministries.
Later, Finance Minister Nirmala Sitharaman tabled the supplementary demands for grants for 2021-22 in the Rajya Sabha.
As per the document, Rs 62,057 crore would be given to the Civil Aviation Ministry for equity infusion in Air India Assets Holding Company (AIAHL) for repayment of past government guaranteed borrowing and past dues/liabilities of Air India.
In October, the government signed the share purchase agreement with Tata Sons for the sale of Air India, along with low-cost carrier Air India Express and ground handling arm AISATS, for Rs 18,000 crore. The amount includes payment of Rs 2,700 crore in cash and take over Rs 15,300 crore of the carrier’s debt.
As of August 31, Air India had a total debt of Rs 61,562 crore. Of the total amount, Talace (a Tata Group company) will take over Rs 15,300 crore and the remaining Rs 46,262 crore will be transferred to AIAHL.
As per the supplementary demands for grants, an additional Rs 2,628 crore would be given towards loans and advances to Air India for recoupment of advance from Contingency Fund of India.
The additional fertiliser subsidy includes Rs 43,430 crore on account of payment towards indigenous and imported Phosphatic and Potassic (P&K) subsidy and Rs 15,000 crore towards urea subsidy scheme.
Besides, the Department of Food and Public Distribution would be given an additional Rs 49,805 crore for meeting expenditure towards various schemes of food storage and warehousing.
About Rs 2,400 crore would be given to Department of Commerce for meeting expenditure towards subsidies under the ‘Interest Equalisation Scheme’, and Investment under the Export Credit Guarantee Corporation (ECGC) scheme, among others.
Another over Rs 5,000 crore and over Rs 4,000 crore has been earmarked for additional spending by the ministries of Defence and Home, respectively.
The 2021-22 Budget had projected the government’s total expenditure at Rs 34.83 lakh crore. But this is expected to overshoot considering the two batches of supplementary demands for grants presented by the government so far.
The government had in August received Parliament nod for net additional spending of Rs 23,675 crore in the first batch of supplementary demands for grants.
ICRA Chief Economist Aditi Nayar said at end-October 2021, 52 per cent of the full year expenditure target had been completed, and a portion of the higher than expected net cash outgo of Rs 3 lakh crore in the second supplementary demand for grants will need to be absorbed through savings in other demands, to curtail the impact on the fiscal deficit.
Nonetheless, there is near certainty that the fiscal deficit will exceed the budgeted Rs 15.1 lakh crore, despite ICRA assessment that net tax revenues and RBI surplus transfer will together surpass the BE by Rs 1.7 lakh crore.
“As hopes of a substantial portion of the ambitious FY2022 disinvestment target being realised fade, and we move closer to eventual rate hikes from the MPC, G-sec yields are likely to witness an inevitable hardening,” Nayar said.
Around three-quarters of the enhanced net cash outgo in the second supplementary demand for grants has been led by four big ticket items, namely fertiliser subsidies, pending export promotion incentives, expenditure towards food storage and warehousing, and equity infusion into AIAHL, she added.
As per the supplementary demands for grants, about Rs 14,000 crore additional amount has been sought for Ministry of Housing and Urban Affairs including for meeting the requirement for non-performing asset under Prime Minister’s Street Vendors’ Atmanirbhar Nidhi (PM SVANidhi) and grants for creation of capital assets under Pradhan Mantri Awas Yojna Urban (PMAY-U).
For meeting additional expenditure towards grants for creation of capital assets under MPLADS (Members of Parliament Local Area Development Scheme), the government has proposed Rs 1,153 crore for the current fiscal year.
