September 1, 2015 3:04:53 am
The period from late August to early October is usually thought of as a quiet and relatively lean period in the finance ministry after the passage of the Union budget and the first supplementary demand for grants.
However, in the absence of the Planning Commission, the finance ministry has now advanced the Budget preparations by two months to late August. Further, at least two crucial reports that will have an impact on the Centre’s balance sheets are also expected by the end of the year. These include the reports of the Expenditure Management Commission as well as the Seventh Pay Commission.
In effect, this means that the exercise for the Union Budget 2016-17 that will be presented in late February has started more than six months in advance. The government plans to use this timeline for all Budgets going forward.
“This year on plan allocations also have to be done through the ministry of finance as there is no Planning Commission now. This, along with the review of schemes will take up a lot of time due to extensive consultations that are required with each ministry,” said a senior finance ministry official.
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Accordingly, the finance ministry on August 18 issued the Budget circular 2016-17 that lists out the requirements and formats for each ministry and Union territory for preparing their estimates for revenue and expenditure.
“The Budget circular is being issued about two months in advance to ensure wider consultations with all ministries and departments on various issues. The first round of discussions, which will precede the Revised Estimates discussions, will be held with effect from September 4, 2015,” said the Budget circular.
Last week, the Budget division in the department of economic affairs in the finance ministry also issued an exhaustive schedule for 58 meetings with financial advisors of central government departments that will take place all through September.
Starting late October, the ministry will then initiate discussions to finalise the revised expenditure and revenue statements for each central government department and UTs.
Significantly, the finance ministry had last year too worked on the plan allocations as at that time the Plan Panel was in an almost “abeyance”- like mode with no deputy chairman or members.
“Last year, advisers in the Planning Commission were still. But now we have formalised the process for the finance ministry to work on all modalities,” said a second official.
Earlier, while the finance ministry worked on the non-plan aspect relating to subsidies, interest payments and salaries and pensions in the Budget, it was the Planning Commission that reviewed schemes and programmes of the various ministries and finalised the Plan spend to these agencies.
The gross budgetary support was then decided in consultation by the two although the final say is with the Prime Minister.
Meanwhile, the ministry is also hopeful that the additional two months will give it sufficient time to fully review the reports of the Expenditure Management Commission (EMC) and the Seventh Pay Commission that are due over the next few months.
The EMC, headed by former Reserve Bank of India governor Bimal Jalan is slated to submit its final report on rationalising expenditure and subsidies before the Union Budget 2016-17. The Seventh Pay Commission, whose recommendations are likely to be implemented from next fiscal, recently got a four-month extension and will now submit its report by December 31.
“The decision on accepting and implementing the recommendations will lie with the government but both these reports will have a huge impact on the Exchequer,” said the first official.
Meanwhile, the revenue department in the finance ministry, which is responsible for finalising tax proposals, is also hopeful that the additional time will help it in wider consultations with stakeholders and avoid controversies and confusions that often erupt after the presentation of the Union Budget.
Significantly, the government has also finalised its team of key officials who would be responsible for the Union Budget 2016-17.
In an order issued on August 28, revenue secretary Shaktikanta Das has been appointed as the new economic affairs secretary to replace Rajiv Mehrishi who retired on Monday. Financial services secretary Hasmukh Adhia would be the new revenue secretary while corporate affairs secretary Anjuly Chib Duggal would be the next financial services secretary.
Expenditure secretary Ratan Watal is likely to be the new finance secretary as he is the senior most amongst all finance ministry secretaries. However, equally crucial posts of directors in the Budget division are still vacant.
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