India Seeks INR 1.31 Lakh Crore Extra Spending: Big Boost for Subsidies, Defence and Oil Firm

Among the key allocations: roughly INR 41,030 million for defence, focused on procurement and capital costs that signal a continued push for modernisation and strategic readiness. File Photo.

The central government has formally requested Parliament to approve an additional INR 1.31 lakh crore in spending for the current fiscal year ending March 31, 2026. This is a move revealed in official documents tabled with the first batch of supplementary demands for grants. The Economic Times and Reuters verbally reported this figure, and it underscores the growing fiscal demands as the year progresses.

While the gross additional allocation is INR 1.31 lakh crore (approx. USD 14.6 billion), it is not completely clear how much of this will result in higher overall government expenditure. Historically, a portion of such supplementary demands has been met through savings or by reprioritising existing allocations; that means the net increase to outgo might be much lower.

The government proposes a net cash outgo of INR 414.55 billion (approx. USD 4.62 billion). Among the key allocations: roughly INR 41,030 million for defence, focused on procurement and capital costs that signal a continued push for modernisation and strategic readiness. Further, around INR 125 billion has been sought to compensate state-run oil marketing companies for losses incurred while subsidising cooking gas and INR 110 billion for fertiliser subsidies to support both domestic and imported phosphatic & potassic fertilisers.

Additionally, INR 75.25 billion is proposed to cover increased costs of imported urea, which is a key input for many farmers. At the macro level, this supplementary demand comes against the backdrop of the government’s already high expenditure: the originally budgeted outlay for the fiscal year is INR 50.65 lakh crore. From April to October, the fiscal deficit has already touched INR 8.25 lakh crore – about 52.6 per cent of the full-year estimate, higher than the same period last year.

These allocations are important for citizens; increased fertiliser and LPG subsidies may help farmers with input costs and ease living expenses for households which are dependent on cooking gas. Defence expenditure, though less visible on a day-to-day basis, signals the government’s intent to sustain strategic readiness and military modernisation.

But the key question still remains: how much of this gross demand ends up as net additional expenditure after internal adjustments and savings? That will be the deciding factor in whether this injection expands the fiscal deficit significantly or is simply a reshuffle for existing commitments. For policymakers and the public, the supplementary demand offers a transparent look at the government’s evolving priorities in a volatile economic environment.

Source: Reuters, The Economic Times