Govt gets nod for ₹2.01 lakh cr extra spend, total FY26 add-on crosses ₹2.4 lakh cr, deficit impact in focus

Parliament on Tuesday approved the second batch of Supplementary Demands for Grants (SDGs) , allowing the Centre to incur an additional net cash outgo of ₹2.01 lakh crore in the current financial year ( FY 2025–26 ). The Rajya Sabha returned the Appropriation Bill, 2026 after a discussion and reply by Finance Minister Nirmala Sitharaman , while the Lok Sabha had cleared the demands on March 13 . The government had sought a gross additional expenditure of ₹2.81 lakh crore , with ₹80,000 crore expected to be offset through savings and additional receipts, bringing the net additional spending to ₹2.01 lakh crore.

This is the second such approval in FY26. The first batch of SDGs involved a net additional spending of about ₹41,455 crore , taking the total net additional spending this year to approximately ₹2.42 lakh crore . This is over and above the original Union Budget expenditure of about ₹47.7 lakh crore for FY26.

While the government has indicated ₹80,000 crore in offsets in the second batch, there is no clear official indication of additional revenue gains sufficient to absorb the cumulative increase. Budget data suggests tax revenues have not significantly exceeded estimates , while disinvestment receipts have fallen short , leaving non-tax revenues as the primary, though limited, cushion.

On a combined basis, the additional spending implies an indicative unfunded gap of around ₹1.5–1.6 lakh crore . With India’s nominal GDP estimated at ₹320–330 lakh crore , this translates to roughly 0.45–0.50% of GDP (45–50 basis points) . Against the budgeted fiscal deficit of ~5.1% of GDP , this could push the deficit closer to the ~5.5–5.6% range , if not offset elsewhere.

The government, however, maintains that it will adhere to its fiscal glide path , suggesting that reallocations, late-year receipts, and expenditure management may contain the final deficit.