What Happened
- Parliament gave its approval for ₹2.01 lakh crore in additional net expenditure for Financial Year 2025–26 when the Rajya Sabha returned the Appropriation Bill, 2026 after Finance Minister Nirmala Sitharaman's reply.
- The Lok Sabha had on March 13, 2026, approved the second batch of Supplementary Demands for Grants (SDG) for FY 2025–26, authorizing gross additional expenditure of ₹2.81 lakh crore — reduced to ₹2.01 lakh crore net after accounting for ₹80,000 crore in additional receipts.
- Key allocations within the supplementary grants include: ₹1 lakh crore for a new Economic Stabilisation Fund, ₹41,822 crore for defence, ₹23,641 crore for PMGKAY (food security), and ₹19,230 crore for fertilizer subsidy.
- The Finance Minister assured Parliament that the additional spending will not push the fiscal deficit beyond the 4.4% of GDP target set in the Union Budget 2025–26.
- The Rajya Sabha, as a Money Bill house, can only delay a Money Bill for a maximum of 14 days, after which it is deemed passed — making Rajya Sabha's return without amendments the final procedural step.
Static Topic Bridges
Supplementary Demands for Grants: Constitutional Basis (Article 115)
The Supplementary Demands for Grants (SDG) mechanism is grounded in Article 115 of the Constitution of India, which empowers the President to cause a statement of supplementary or additional expenditure to be laid before Parliament when the original budget amounts prove insufficient or when new services arise mid-year. The same procedures applicable to the Annual Financial Statement (Articles 112–114) apply: presidential recommendation, Lok Sabha vote, and passage of an Appropriation Bill to authorize withdrawal from the Consolidated Fund of India.
- Constitutional provision: Article 115 — Supplementary, Additional, or Excess Grants
- Triggered when: (a) original budget amount insufficient; (b) new service not in original budget; (c) excess spending requiring post-facto approval
- Presented by: President of India on recommendation of Finance Minister
- Approved by: Lok Sabha (Rajya Sabha cannot vote on money matters — Article 109)
- Authorization instrument: Appropriation Bill (Article 114) — authorizes withdrawal from Consolidated Fund
- Supplementary Demands are presented in two batches (sometimes three) during the budget session and winter session
Connection to this news: The ₹2.81 lakh crore gross SDG approved is among the largest second-batch supplementary demands in recent years, requiring a fresh Appropriation Bill to authorize the withdrawals from the Consolidated Fund of India.
Appropriation Bill: Money Bill Procedure and Rajya Sabha's Limited Role
The Appropriation Bill is a constitutional necessity — no money can be withdrawn from the Consolidated Fund of India without parliamentary authorization (Articles 114 and 266). The bill is classified as a Money Bill under Article 110, which means the Rajya Sabha has no power to reject or amend it; it can only recommend changes, which the Lok Sabha may accept or reject. If the Rajya Sabha does not return it within 14 days, it is deemed to have been passed by both Houses. This makes the Rajya Sabha's "return" after the FM's reply a formality, not a substantive check.
- Article 114: Appropriation Bills — no withdrawal from CFI without law
- Article 110: Money Bill definition — includes any bill dealing with taxation, borrowing, Consolidated Fund
- Article 109: Money Bills — Rajya Sabha's role limited to recommendations within 14 days; Lok Sabha prevails
- Article 266: Consolidated Fund of India — all revenues, loans, and loan repayments of the Government of India go into CFI; all expenditure paid from CFI requires appropriation by Parliament
- Difference: Appropriation Bill vs Finance Bill — Appropriation Bill authorizes expenditure; Finance Bill changes taxation
- Cut Motions in Lok Sabha on SDG: Three types — Policy Cut, Economy Cut, Token Cut
Connection to this news: The Rajya Sabha "returning" the Appropriation Bill 2026 after the FM's reply without amendment is the standard constitutional closure of the SDG process — its return completes bicameral passage.
Fiscal Deficit and the Economic Stabilisation Fund
The Union Budget 2025–26 targeted fiscal deficit at 4.4% of GDP, continuing a medium-term consolidation path (4% by FY 2027–28 per the FRBM glide path). The creation of a ₹1 lakh crore Economic Stabilisation Fund (ESF) — carved out of the supplementary allocation — is significant as a buffer mechanism against global shocks (commodity price spikes, geopolitical disruptions). The FRBM Act, 2003 (amended 2018) requires the government to specify the fiscal consolidation path; the amended Act allows a 0.5% deviation from the target in extraordinary circumstances.
- Fiscal deficit target FY 2025–26: 4.4% of GDP
- FRBM Act, 2003 (Fiscal Responsibility and Budget Management): Mandates fiscal transparency and medium-term consolidation
- FRBM 2018 amendment: Replaced debt and revenue deficit targets with fiscal deficit glide path; allowed escape clause of ±0.5% in extraordinary circumstances
- Economic Stabilisation Fund (ESF): ₹1 lakh crore — new fund to buffer against global commodity shocks, geopolitical risks
- Additional receipts estimated: ₹80,000 crore (reduces net additional cash spending from ₹2.81 lakh crore gross to ₹2.01 lakh crore)
- Defence supplementary allocation: ₹41,822 crore — largest sectoral share in SDG
Connection to this news: The Finance Minister's assurance that fiscal deficit will not exceed 4.4% of GDP despite ₹2.01 lakh crore net additional spending is grounded in the ₹80,000 crore additional receipts estimate and the FRBM framework.
PMGKAY: Food Subsidy and the Consolidated Fund
Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) was merged into the National Food Security Act (NFSA) framework from January 2023, providing 5 kg of free grain per month to 81.35 crore beneficiaries under the NFSA for one year, later extended through December 2028. The ₹23,641 crore additional allocation for PMGKAY under the SDG reflects the fiscal cost of universal free grain provision, which adds to Food Corporation of India (FCI) procurement obligations.
- NFSA, 2013: Entitles 75% rural and 50% urban population to 5 kg subsidized grain/month at ₹1–₹3/kg
- PMGKAY (post-Jan 2023 merger): Free grain (₹0) to NFSA beneficiaries; 81.35 crore beneficiaries
- FCI role: Procures, stores, and distributes grain on behalf of the government
- Annual food subsidy budget: ~₹2 lakh crore; additional ₹23,641 crore in SDG reflects year-end demand push
- Fertilizer subsidy SDG allocation: ₹19,230 crore (for urea and P&K fertilizers)
Connection to this news: The two largest social sector allocations in the SDG — PMGKAY food subsidy and fertilizer subsidy — together account for nearly ₹43,000 crore and reflect sticky welfare commitments that routinely require supplementary budgetary cover.
Key Facts & Data
- Net additional spending approved: ₹2.01 lakh crore (FY 2025–26)
- Gross supplementary demand: ₹2.81 lakh crore; additional receipts: ₹80,000 crore
- Economic Stabilisation Fund: ₹1 lakh crore (new buffer against global shocks)
- Defence supplementary allocation: ₹41,822 crore
- PMGKAY (food subsidy): ₹23,641 crore additional
- Fertilizer subsidy: ₹19,230 crore additional
- Fiscal deficit target maintained: 4.4% of GDP (FY 2025–26)
- Constitutional basis: Article 115 (SDG) + Article 114 (Appropriation Bill) + Article 266 (CFI)
- Rajya Sabha role: Cannot amend Money Bills; must return within 14 days (Article 109)