The Indian government, on Monday, 1st December 2025, approached Parliament for its approval to undertake a net additional expenditure of ₹41,455 crore during the current financial year (2025-26). This move is aimed at meeting crucial subsidy obligations and other administrative costs.
Breakdown of the Supplementary Demands
The Finance Ministry tabled the first batch of Supplementary Demands for Grants in Parliament, seeking authorization for a gross additional expenditure of ₹1,32,268.85 crore. Out of this substantial sum, the net cash outgo—the fresh money required from the exchequer—is pegged at ₹41,455.39 crore.
The significant allocations within this net outgo include:
- ₹11,000 crore for fertiliser subsidy.
- ₹7,525 crore for importing urea.
- ₹9,473 crore to compensate state-run oil marketing companies (OMCs) for losses incurred from selling fuel below market rates.
Other notable proposals for additional revenue spending encompass ₹1,304 crore for the Department of Higher Education, ₹1,192 crore for the strengthened direct tax department's establishment costs, ₹2,198 crore for a development package for Manipur, and ₹2,504 crore for transferring financial liabilities to the Union Territory of Ladakh.
Fiscal Deficit Target to Remain Unaffected
Despite the significant additional spending, the government maintains that its fiscal deficit target for FY26 will stay intact. Finance Minister Nirmala Sitharaman had set a fiscal deficit target of ₹15.69 trillion, which is 4.4% of GDP, in the Union Budget presented earlier this year.
Officials indicate that the impact of the ₹41,455 crore net cash outgo will be neutralised through potential savings in other areas, particularly from the Centre's effective capital expenditure of ₹15.48 trillion. Furthermore, a rapidly expanding economy is expected to absorb the extra expenditure. India's real GDP growth for the July-September quarter (Q2 FY26) surprised at a six-quarter high of 8.2%, significantly above most forecasts of around 7%.
Economic Context and Expert Views
The request for supplementary grants comes as the government finalises proposals for the upcoming FY27 Union Budget, likely to be presented on 1st February. The focus on infrastructure creation is expected to continue.
However, economists point to a potential challenge. Nominal GDP growth, crucial for revenue projections, has slowed to 8.7% in Q2 due to low inflation and is expected to end FY26 below 8%. The FY26 Budget had assumed a nominal GDP growth of 10.5%. D.K. Joshi, Chief Economist at CRISIL Ltd., noted that the extra expenditure could pose fiscal challenges given the lower nominal GDP growth, adding that a clearer picture would emerge after the analysis of third-quarter numbers.
At the end of October 2025, the fiscal deficit stood at ₹8.25 trillion, or 52.6% of the annual target. The government remains committed to a steady fiscal consolidation path, aiming to reduce the Centre's debt to around 50% of GDP by the end of March 2031.
