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News: Lok Sabha approved the Second Batch of Supplementary Demands for Grants for 2025–26, including allocation for an Economic Stabilisation Fund to address global economic shocks.
About Economic Stabilisation Fund (ESF)
- The Economic Stabilisation Fund (ESF) is a proposed fiscal mechanism to provide financial space for responding to global economic disruptions.
- Proposed by: Finance Ministry.
- Corpus Size: The total proposed outlay for the fund is ₹1 lakh crore, with ₹57,381 crore proposed in the supplementary demands and the rest added through savings of ministries and departments.
- Purpose: The fund aims to provide fiscal headroom for India to respond to global headwinds, recent crises, unanticipated supply chain disruptions, and unexpected shocks to sub-sectors of the economy.
- Managed by: The fund is placed under the reserve funds managed by the Department of Economic Affairs (DEA).
- Impact: The fund will enable India to absorb economic shocks and respond to global crises while maintaining the fiscal consolidation roadmap.
About Supplementary Demands for Grants
- Supplementary Demands for Grants are additional financial approvals sought by the government during a financial year to meet expenditure not provided in the original budget.
- Constitutional back up: Supplementary grants derive authority from Article 115 of the Constitution of India, which deals with additional and excess demands for grants.
- Process
- Initiation: The concerned ministry identifies additional financial requirements and submits the proposal to the Ministry of Finance.
- Examination by Ministry of Finance: The Department of Expenditure reviews the proposal and evaluates its financial justification.
- Preparation of Supplementary Demands: Approved proposals are consolidated and presented to Parliament as Supplementary Demands for Grants.
- Parliamentary Approval: Lok Sabha discusses and votes on the demands, after which an Appropriation Bill authorises withdrawal from the Consolidated Fund of India.
- Types of Supplementary Grants
- Supplementary Grant: It is granted when the funds authorised in the original budget are insufficient or when new services need financing during the year.
- Additional Grant: It is granted for a new service or project that was not included in the original budget but is introduced during the financial year.
- Excess Grant: It is granted when expenditure exceeds the amount authorised for a service in the Appropriation Act of the previous year.
- Vote on Account: It is a temporary provision that allows government expenditure in the early part of the financial year until the full budget is passed.
- Vote of Credit: It is granted for unexpected and exceptional expenditure such as war when the details cannot be precisely stated in advance.
- Exceptional Grant: It is granted for a special purpose that does not form part of the current year’s normal services.
- Key Allocations in FY26
- ₹41,430 crore for Defence Services.
- ₹6,140 crore for the Ex-Servicemen Contributory Health Scheme.
- ₹37,886 crore for local bodies of states.
- ₹19,230 crore for fertilizer subsidies.
- ₹30,000 crore for Viksit Bharat – G RAM-G act.
