The Indian government has proposed an additional expenditure of ₹2.35 lakh crore for the financial year 2020-21. The plan is part of the first batch of Supplementary Demands for Grants presented to the Lok Sabha by the Minister of Finance.
Breakdown of Additional Expenditure
The additional ₹2.35 lakh crore consists of a net cash outgo of ₹1.67 lakh crore, complemented by savings or enhanced receipts/recoveries of ₹68,868 crore from various ministries and departments.
Allocation of Funds Due to Covid-19 Pandemic
The Covid-19 pandemic has necessitated emergency financial measures. The supplementary demand includes additional allocations for the following:
1. Pradhan Mantri Garib Kalyan Yojana (PMGKY) relief measures announced in March 2020, including insurance schemes, food security, cash transfers, and assistance to small companies for payroll obligations.
2. Aatmanirbhar Bharat stimulus package declared in May 2020, focusing on four integral aspects: land, labour, liquidity and laws.
3. Grants-in-aid for the State Disaster Response Funds, as per the interim recommendations of the 15th Finance Commission. With Covid-19 being treated as a “notified disaster” under the Disaster Management Act, 2005, these funds are especially critical.
4. Bank recapitalisation grants, necessitated by the economic impact of the lockdown. Despite the absence of allocated funds for bank recapitalisation in Budget 2020-21, the Reserve Bank of India (RBI) announced the need for infusion of money into banks.
5. Financial support for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme, currently facing a shortage of funds.
Supplementary Grants: A Constitutional Provision
As per Article 115 of the Indian Constitution, Supplementary Grants are provided when the sum approved by the Parliament for a particular service in the current financial year proves inadequate.
Other Types of Grants
In situations apart from the regular budgetary estimations of income and expenditure, the Parliament sanctions other forms of grants during extraordinary or special circumstances. These include:
– Additional Grant: Extended when the financial year witnesses a need for additional expenditure on a new service not considered in the annual budget.
– Excess Grant: Provided when the money spent on any service surpasses the amount allocated in the budget.
– Vote of Credit: Given to meet unexpected demands on India’s resources that cannot be detailed in the budget due to their vast or indeterminate nature.
– Exceptional Grant: Granted for specific purposes and unrelated to the current service of any financial year.
– Token Grant: Offered when expenditure proposed for a new service can managed through reappropriation, involving the reallocation of funds from one division to another.
These grants – supplementary, additional, excess, exceptional and vote of credit – fall under the purview of Article 116 of the Constitution and are administered as per the standard procedure applicable to the regular budget.