Expense planning: Budgetary allocations likely to maintain status quo

For FY21, the government planned to spend Rs 30.42 trillion
With only a few weeks before the Budget is presented, the finance ministry has told the line ministries they will get more or less the same allocation in FY22 as they did in FY21. The numbers in aggregate mean the government of India will not let the fiscal deficit run away in FY22. This includes the routine allocations for crucial ministries like health, because the Budget for the vaccine will be borne largely by the states. The Centre will make good their expenditure, depending on the progress of the campaign through the year.

Few ministries had expected any jump in their allocations for FY22 over the average of 13 per cent rise they had got in FY21 and FY20. But as the pandemic struck, not many departments were able to spend this amount allocated to them through the first two quarters.

The departments were classified into three groups and were asked to savagely cut expenditure. Similarly, the ministries were also classified into three groups. Of those, depending on their relevance to tackling the pandemic, the first set had to reduce their expenditure by 20 per cent, the next by 40, and the rest by 60 per cent. It was left to the departments concerned to figure out how to make the cuts.

The numbers being circulated for the next financial year will bring the ministries to more or less the same position regarding their spending they had hoped to be in in March 2020.

It is not a bad deal. An officer said as most of the heads were left unspent, a fresh beginning can be made.

The government, it would seem, is reserving its firepower to spend on big-ticket items that will be announced in the Budget. This will include spending for the states in accordance with the 15th Finance Commission report, which will be tabled in the two Houses on the day of the Budget.  For FY21, the government had planned to spend Rs 30.42 trillion, according to Budget estimates. Leaving out the committed interest payments and transfers to states, including centrally sponsored schemes, grants given by the Finance Commission and sundry others, loans, etc, the remainder is Rs 16.20 trillion. Subtracting other committed expenditures, including wages and pensions, which amount to Rs 4.58 trillion, had left about Rs 11.62 trillion for the entire year. The ministries will do the same maths after a gap of one year.



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