Expenditure rationalisation being an expected theme of the Union Budget, FY23 , a number of Ministries are likely to get lower allocation as compared to Budget Estimate of Fiscal Year 2021-22 (FY22). However, it could be higher than Revised Estimate (RE) for the said year.
Finance Minister Nirmala Sitharaman is expected to present the Budget for FY23 on February 1. This year, the Budget will have allocations for 56 Central Ministries/Departments distributed through 102 Demands for Grants with the addition of Ministry of Cooperation.
“RE for FY22 has been communicated to various Central Ministries and Departments and in number of Ministries and Departments. Though because of the Budget protocol and secrecy, Ministries/Department-wise number cannot be revealed now, indications are that for a number of Central Ministries and Departments, RE could be lower than BE,” a senior Government official said on the condition of anonymity. Further, he mentioned that BE of FY23 for such Ministries and Departments could be higher than RE of FY22, showing a better picture.
The Budget proposes expenditure which is called BE. However, this number is revised on the basis of number of elements and made public in the next Union Budget. In other words, Budget for FY23 will have RE for FY22 and BE for FY23. Convention has been to use first six months expenditure number to calculate RE and this is communicated to various Central Ministries and Departments during pre-Budget consultation, which normally takes place in October. Similarly, for first draft of BE for next fiscal is derived from expenditure between April and November.
Not much cut seen
However, in an interview to BusinessLine in November, Finance Secretary TV Somnathan had said: “We are not going by the rule of thumb this year. It does not work in such years. We know this year’s first half was characterised by some natural phenomenon in the first quarter and some restrictions in the second quarter. So that will not be the basis for our estimations.”
Economists, too, do not expect much cut, rather they say the Government will focus on prioritisation considering limited resources and higher liability. Deepak Mishra, Director and Chief Executive of economic policy think tank ICRIER, said due to high level of general government debt — nearly 91 per cent of GDP — India has limited space to provide additional fiscal support in the near term.
Therefore, “the finance minister has to make some tough decisions in the next Budget, between maintaining fiscal sustainability and expanding social sector spending. We believe that with appropriate expenditure prioritisation and targeted spending on pandemic-affected sectors, the Budget can promote growth while ensuring macroeconomic stability,” he said.
Last fiscal (FY21), the government lowered RE for 67 grants (out of 101) and managed to re-prioritise money amounting around ₹2-lakh crore in areas such as food and health and accordingly succeeded in keeping the fiscal deficit to 9.5 per cent of GDP.
For FY 22, the Budget prescribed total expenditure of over ₹34.83-lakh crore. Data from Controller General of Account (CGA) show that out of 55 Central Ministries/Departments, 18 have spent less as a percentage of BE in April-November period of FY22 compared with corresponding period of last fiscal. In the same period, expenditure as percentage of BE for two Ministries remained the same while for 25 Ministries/Departments, it was higher.