GST dues to states up expenditure tab

The pressure to compensate states for revenue loss on account of the GST has bloated the government's expenditure bill this fiscal.

By Our Special Correspondent
  • Published 9.03.18
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New Delhi: The pressure to compensate states for revenue loss on account of the GST has bloated the government's expenditure bill this fiscal.

The Narendra Modi-government on Thursday sought Parliament's approval for an additional cash spending of Rs 85,315.30 crore in the current fiscal, the bulk of which - Rs 58,999 crore - will go to meet the revenue loss to states because of the implementation of the GST in place of VAT and other state levies.

Another Rs 9,260 crore will go towards defence pension.

Minister of state for parliamentary affairs Arjun Ram Meghwal moved the fourth batch of Supplementary Demands for Grants for 2017-18 in the Lok Sabha.

This extra spending is unlikely to impact the country's fiscal deficit target for 2017-18 as the government had raised the target to 3.5 per cent of the gross domestic product from 3.2 per cent earlier.

The government said the gross additional expenditure would be over Rs 9.06 lakh crore and this would be matched by over Rs 8.21 lakh crore savings by various ministries and departments.

The net cash outgo from the exchequer would aggregate to Rs 85,315.30 crore.

A bulk of the net cash outgo would be used to compensate the states on account of revenue loss suffered because of the implementation of the GST as well as for phasing out of central sales tax (CST).

A total of Rs 61,215.58 crore, which is about 71 per cent of Rs 85,315 crore, has been earmarked for the department of revenue.

This includes Rs 58,999 crore to be paid to states on account of revenue loss after the GST implementation and Rs 1,384 crore to be paid as CST compensation.

Another major spending head is Rs 15,065.65 crore towards grants in aid and creation of capital assets under various schemes.

Besides, Rs 5,721.90 crore would be spent on meeting expenditure towards interest payment on market loans and treasury bills.

Meanwhile, economic affairs secretary Subhas C. Garg said the government was expecting "some more" dividend from the Reserve Bank of India this month.

The apex bank paid Rs 30,659 crore as dividend for the fiscal ended June 2017.