* Spending to include 92.6 bln rupees for defence pensions
* Extra spending unlikely to widen fiscal deficit
* 2017/18 fiscal deficit target earlier raised to 3.5 pct of GDP (Adds details on extra spending, background)
By Manoj Kumar
NEW DELHI, March 8 (Reuters) - The Indian government on Thursday sought parliament’s approval to spend a net additional 853 billion rupees ($13.14 billion) in new spending in the current fiscal year to end-March 2018, a finance ministry statement said.
Prime Minister Narendra Modi, who faces national elections next year, has pushed up spending on rural infrastructure and jobs-creating sectors to bolster his popularity among voters.
This extra spending is unlikely to impact the country’s fiscal deficit target for 2017/18 as India had raised the target to 3.5 percent of gross domestic product from 3.2 percent earlier.
The spending would include 627 billion rupees compensation to the state governments and union territories following the launch of Goods and Services Tax in July last year, and 92.6 billion rupees for pension payments to the armed forces.
Asia’s third largest economy grew 7.2 percent in the December quarter, its fastest pace in five quarters, beating China’s 6.8 percent growth in that quarter.
Modi faces criticism over mounting bad loans at state banks and a $1.77-billion fraud at state lender Punjab National Bank , the biggest in the country’s banking history. ($1 = 64.9200 Indian rupees) (Reporting by Nigam Prusty and Manoj Kumar; Editing by Malini Menon and Himani Sarkar)