BUDGET-MAKING EXERCISE TO BEGIN FROM OCTOBER 12
The finance ministry will kick-start the exercise to prepare the Union Budget for 2022-23 (FY23) from October 12, an official notification said on Monday. The pre-budget meetings as well as the meetings to discuss the revised estimates will start from October 12 and will continue till the second week of November.
The finance ministry will kick-start the exercise to prepare the Union Budget for financial year 202223 (FY23) from October 12, according to an official notification released on Monday.
“The pre-budget meetings as well as the meetings to discuss the revised estimates will start from October 12 and will continue till the second week of November,” according to the Budget circular of the Department of Economic Affairs’ Budget Division.the Union Budget is expected to be announced on February 1, as has been the practice of the past few years.
On the agenda
Keeping in view the special circumstances this year, the government circular said final budgetary allocations will be decided according to the overall financial position and absorption capacity of the ministry concerned.
Sources say that pre-consultations or meetings with ministries and central departments happen in alphabetical order according to the name of the ministry or department.
This time, the exercise will involve the new ministry of cooperation, taking the total number to 56. While the number of demands for grants will rise to 102. Finance secretaries of all Union territories have also been asked to prepare in advance a statement detailing all plan outlays and these should be made available to the Union home ministry.
Apart from holding internal discussions on various crucial macro numbers such as gross domestic product (GDP), revenue and expenditure accounts, fiscal deficit, the finance ministry also meets corporate houses and other stakeholders and seeks their views. The Budget Estimates (BE) for FY23 will be provisionally finalised after the expenditure secretary completes discussions with other secretaries and financial advisers, the circular noted.
“The final ceilings will be decided separately by the Ministry of Finance latest by January 15, 2022, taking into account the resource assessment of the government and the available fiscal space,” the circular said. The notification said that the pre-budget consultation will also take up the issue of fixing limits for all types of expenditure, including centrally-sponsored schemes.
It is expected that the Revised Estimates for the current fiscal will be prepared based on the expenditure till November. This fiscal, there was no expenditure cap during the first quarter, but in Q2 a cap was implemented for 82 out of 101 demands for grants.
Considering lower expenditure during the first four months and cap during Q2, there is an expectation that Revised Estimates for this fiscal and Budget allocation for next for many of central ministries/departments could be lower. With improvement in revenue receipts, it is prudent to watch government action on expenditure management with respect to Q3 as that will decide the outlay in Q4.
The exercise will have to focus on accelerating economic growth, while maintaining fiscal prudence amid the threat of a third wave of the pandemic.
The Centre’s fiscal deficit was just 21 per cent of Budget Estimates in the first four months of the current fiscal thanks to robust revenues and brakes on capital expenditure by state governments. By then, the fiscal deficit had crossed the Budget Estimates of last year. Because of that and the move to make subsidies transparent, the Centre’s fiscal deficit had risen to 9.5 per cent of GDP in FY21 against the Budget projection of 3.5 per cent.
The Centre’s target of reining in the fiscal deficit at 6.8 per cent seems to be on track, but it will have to step up capital expenditure to perk up growth.
While the economy grew 20.1 per cent in Q1 on a low base, the GDP at constant prices was still 9.2 per cent lower than Q1 of FY20, a pre-covid period.