Finance Ministry Seeks Parliament's Nod for ₹2.81 Lakh Crore Extra Spending in FY26
The Finance Ministry tabled the Second Supplementary Demands for Grants (SDG) for FY 2025-26 in Parliament, seeking gross additional expenditure of ₹2.81 lakh crore
The net cash outgo is ₹2.01 lakh crore — the remainder (₹80,145 crore) to be met through savings from existing ministry budgets and enhanced receipts
Major allocations include: ₹19,230 crore additional fertiliser subsidy; ₹57,381.84 crore for an Economic Stabilisation Fund (ESF) of ₹1 lakh crore total
Finance Minister Sitharaman assured Parliament that the supplementary demands do not breach the revised fiscal deficit target for FY26
Lok Sabha subsequently passed the additional spending through an Appropriation Bill
Supplementary Demands for Grants: Constitutional Framework
The Constitution provides a clear mechanism for additional government spending beyond the regular Union Budget. Article 115 governs Supplementary, Additional, and Excess Grants — three distinct instruments for mid-year expenditure adjustments.
The FY26 Second SDG is a standard Article 115(1)(a) exercise — the actual spending requirements for fertiliser subsidy and the new Economic Stabilisation Fund exceeded what was budgeted in February 2025's Union Budget.
Economic Stabilisation Fund: Concept and Rationale
An Economic Stabilisation Fund (ESF) is a sovereign wealth/stabilisation mechanism designed to provide fiscal headroom during external shocks — commodity price volatility, global recession, or geopolitical disruptions. India's proposed ₹1 lakh crore ESF is conceptually similar to resource-rich nations' sovereign wealth funds (Norway's Government Pension Fund, UAE's ADIA) but is specifically a domestic stabilisation tool rather than a long-term investment vehicle.
The ESF's inclusion in a supplementary demand rather than the original budget reflects the government's reactive response to global headwinds (West Asia conflict, global growth slowdown), suggesting the fund was prioritised after the macroeconomic environment deteriorated post-Budget.
Fertiliser Subsidy: Policy Architecture
India's fertiliser subsidy regime is one of the largest components of the government's non-Plan expenditure. The Nutrient Based Subsidy (NBS) scheme (for P&K fertilisers) and statutory price controls (for urea, under the Urea Policy 2015) together cost the exchequer ₹1.5–2 lakh crore annually.
The ₹19,230 crore additional fertiliser subsidy in the FY26 SDG reflects the fiscal pressure of maintaining affordable input prices for farmers during a period of elevated global fertiliser prices linked to the West Asia conflict.
- Second SDG FY26: Gross additional spending ₹2.81 lakh crore; net cash outgo ₹2.01 lakh crore
- Additional fertiliser subsidy: ₹19,230 crore
- Economic Stabilisation Fund (ESF): ₹1 lakh crore total corpus; ₹57,381.84 crore allocated in this SDG
- 61 grants covered under this supplementary demand
- Article 115 (Constitution): Supplementary, Additional, Excess Grants framework
- Article 116: Votes on Account, Votes of Credit, Exceptional Grants
- FRBM Act, 2003 (amended 2018): mandates fiscal deficit targets with defined escape clauses
- India's annual fertiliser subsidy: ₹1.5–2 lakh crore (urea + NBS combined)