With the exercise for drafting the Union Budget 2023-24 kicking off, Administrative Ministries have sent internal advisories to departments and agencies to come up with more realistic estimates for their annual spending plans and rein in wasteful spending.
Requisition of funds must be sent to line ministries only after careful examination of expenditure to be incurred and the funds already available at their disposal, as per internal communiques sent by some ministries to bodies and divisions under their watch.
“We have asked departments to ensure that due care is taken while framing their Budget needs as well as possible new policy interventions that could be announced in the Budget. Proposals should not only be realistic in terms of implementation, but also ensure that the gap between Budget estimates (BE) and the eventually Revised estimates (RE) is minimal,” a senior official steering the financial plan for next year in a key ministry said.
Officials have also been advised to arrive at BE based on the actual expenditure in the first six months of the current fiscal year — April 1 to September 30, 2022. They may also consider a 20 per cent curtailing in controllable expenditure during their Budget estimating.
Using allocated funds
Line ministries want to avoid having to surrender unused funds towards the end of the year, especially after the Finance Ministry has conveyed concerns about several instances where ministries sought higher RE for some items, but ended up spending less by fiscal-end.
“At least a few ministries have sent internal advisories that this should be avoided. Any variation of more than 10 per cent between the BE and RE would have to be explained, some have been advised,” the official said. Ministries have also sent reminders to ensure that bunching of expenditure does not take place.
Accordingly, no more than 33 per cent and 15 per cent of the expenditure of the BE during a financial year would be permissible in the last quarter and last month of the fiscal, respectively.
Pre-Budget meetings
The Finance Ministry is expected to start pre-Budget meetings to discuss and finalise the RE and BE with administrative Ministries from October 10, which will continue till mid-November.
The Union Budget 2023-24 is likely to be presented on February 1, 2023, although the exact date will be confirmed closer to the event.
The Centre seems to be in a comfortable fiscal space as of now and the objective of these advisories seem to be to ensure that frivolous spending is avoided and estimates are more reliable. Fiscal deficit stood at ₹5.41-lakh crore between April and August, amounting to 32.6 per cent of the full fiscal target. Revenue collections have been buoyant till now and the Centre has cut its market borrowing target by ₹10,000 crore for the fiscal.
Finance Secretary TV Somanathan had in August expressed confidence that the Centre would meet its fiscal deficit target of 6.4 per cent of the GDP in 2022-23 without having to cut down on capital expenditure.