As the Finance Ministry gets ready for the Union Budget 2025-26, the bureaucracy will undergo changes with the designation of a new Finance Secretary and the appointment of two Secretaries – Expenditure and Public Enterprises.
The Ministry has six departments: Economic Affairs, Expenditure, Revenue, Investment & Public Asset Management, Financial Services, and Public Enterprises. With the elevation of Finance Secretary T V Somanathan, who also heads the Expenditure Department, to the position of Cabinet Secretary and the superannuation of Public Enterprises Secretary Ali Raza Rizvi, the Ministry currently has four Secretaries: Ajay Seth (Economic Affairs), Sanjay Malhotra (Revenue), Tuhin K Pandey (Investment & Public Asset Management), and Vivek Joshi (Financial Services).
Conventionally, the senior-most among all six Secretaries is designated as Finance Secretary. Accordingly, Ajay Seth could be appointed as the new Finance Secretary. A 1987-batch Indian Administrative Service officer of the Karnataka cadre, Seth joined the Ministry on May 1, 2021, and is scheduled to superannuate on June 30, 2025. Seth holds an MBA (Gold Medalist) and a degree in Mechanical Engineering. If he is appointed as Finance Secretary, it will be the first time in five years that the Economic Affairs Secretary has been given this post.
Now, the big question is: Who will succeed Somanathan as Expenditure Secretary? There are two names circulating: one from within the Ministry and one from outside. One expectation is that DIPAM Secretary Pandey may be shifted to Expenditure. Seth’s batchmate, Pandey is an Odisha cadre Indian Administrative Service Officer, with an MBA and a postgraduate degree in Economics. Pandey joined the Finance Ministry as DIPAM Secretary in 2019 and is scheduled to superannuate in July next year.
The second name circulating for Expenditure Secretary is Electronics & Information Technology Secretary S Krishnan, a 1989-batch Tamil Nadu cadre officer. After spending 12 years in the cadre and holding various posts in the State, Krishnan joined the Centre last September and is scheduled to superannuate in 2027. He has a postgraduate degree in Economics.
As of now, nothing has been heard about the name for the Public Enterprises Department since the previous Secretary completed their term on July 31. Since then, DIAPM Secretary Pandey has been holding charge of the department, which was carved out from the Heavy Industry Ministry and made part of the Finance Ministry in 2021.
Budget exercise
The Finance Ministry is expected to kick-start the budget exercise for the fiscal year 2025-26 with the issuance of a ‘Budget Circular’ early next month. With this, the first big task of the new Expenditure Secretary will be to finalise the revised estimates for the fiscal year 2024-25 and the budget estimates for the fiscal year 2025-26. These discussions are expected to begin in October. While the revised estimates are finalised based on the expenditure trend of the first six months of the ongoing fiscal, budget estimates for the next fiscal are worked out on based on expenditure trends for nine months of the current fiscal.
The entire exercise will be critical to achieving a fiscal deficit of 4.5 per cent by FY26, as announced by Finance Minister Nirmala Sitharaman. Also, next year’s budget could be the last budget where the deficit is projected as a single number, as it is expected that from FY27 onwards, there could be a range of deficit projections with a focus on the debt-to-GDP ratio.