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Monday, July 16, 2018

Innovative Budgeting: For smoother finance, a Budget during winter

A Budget in December would reduce delays on the ground.

Written by Amitav Ranjan , Sandeep Singh | New Delhi | Published: February 19, 2016 2:10:10 am

In order to ensure that money reaches on time — and not immediately ahead of inactive monsoon season — the Prime Minister-appointed secretaries’ panel on “Innovative Budgeting” wants the annual Budget to be unveiled mid-December rather than in February every year.

According to the documents with The Indian Express, the secretaries’ group headed by RN Choubey argued that as per the current Budget cycle, the Budget gets passed in April or May and funds are made available to implementing agencies by June and this leads to delays on the ground. “This chain can be cut short if the ability to spend can be timed with the financial year … One way of achieving this is to have the Budget presentation moved up from February 28 to the middle of December,” the committee suggested.

The new date for sounding out the government’s fiscal policy in December has been set for 2017-18 retaining April-March as the periodic while advancing the announcement to mid December. It said that for doing this, the winter session can be reclassified as the Budget session and the President’s speech can be incorporated in the same session. While this would mean that the Budget presentation would be based on six-month data as against the nine-month data that is used currently and thus may lead to higher degree of error, the committee said that,

“This can be easily accounted for by the finance minister incorporating updated revenue and expenditure figures in his final response to the Budget discussion.”

It also proposed to convert the mid-year assessment into an economic survey.

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Coming out with its 11-point recommendation on innovative budgeting, the committee also called for removing the distinction between plan and non-plan but said that it should be implemented from the Budget cycle 2017-18 as departments have already set their plans till 2016-17.

“The distinction between plan and non-plan had created a number of unhealthy practices in expenditure and project management … The abolition will restore the focus correctly on the revenue and capital account,” it proposed.

While Budget announcements currently include initiatives that cut across different ministries and departments such as — Swacch Bharat, Skill India, farmers welfare etc — the committee said that there is no clarity with the implementing agencies on the degree of inter-ministerial resources. “We would suggest that on these lines, we provide consolidated statements on all major multi-ministry flagship program. This will facilitate both inter-ministerial coordination as well as public awareness of the scale of initiatives,” said the committee.

It also proposed to amend the FRBM Act to move from annual fiscal deficit target to medium term fiscal prudence goals, with a limit on overall debt to GDP ratio.

It said that instead of pegging fiscal deficit a percentage of GDP, a system of linking fiscal deficit to revenue collection or to growth in revenue collection achieved in past three years could be evolved.

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