Budget 2022: Growth in FY23 expenditure contained on subsidy cut, MNREGA squeeze; interest payments to soar on record borrowing

The government has saved a massive Rs 1.88 lakh crore in the Union Budget 2022-23 by targeting lower-than-expected outgo for subsidy, MNREGA (Mahatma Gandhi Rural National Employment Guarantee Act) allocation and Finance Commission transfers to states against the revised estimates for FY 2021-22.

This has limited the expansion in the FY23 expenditure to 4.3 percent over the revised estimates of FY22. Total additional expenditure is estimated to grow by only Rs 1.75 lakh crore in absolute terms over the previous fiscal to Rs 39.44 lakh crore, much below the expectation of a Rs 40 lakh crore budget size.

The expenditure squeeze is mainly on account of lower food subsidy, pared by Rs 80,000 crore, fertliser subsidy, pared by Rs 35,000 crore and MNREGA budget, pared by Rs 25,000 crore in FY23 over the revised estimates. Just Rs 5,800 crore has been budgeted for petroleum subsidy in FY23, reflecting government’s virtual exit from LPG and kerosene subsidies.