Economy

Finance Ministry kicks off Budget exercise for FY2021-22

Our Bureau New Delhi | Updated on October 03, 2020 Published on October 03, 2020

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Although no date of presentation is mentioned, going by past trends, Budget may be presented on February 1

The Finance Ministry has kicked off the exercise for Union Budget 2021-22 by issuing the traditional circular. Although no date of presentation is mentioned, going by past trends, it is likely to be presented to Parliament on Monday, February 1, 2021.

“In the special circumstances of this year, the basis of the final budgetary allocation will be first and foremost overall fiscal position and subject to that the absorptive capacity of the Ministry/Department,” the circular, dated October 1 and signed by Joint Secretary (Budget) Rajat Kumar Mishra, said. It may be noted that Budget FY2020-21 was initially presented with a size of over ₹30-lakh crore, which was later enhanced by over ₹4.2-lakh crore, giving it a total size of around ₹35-lakh crore.

The circular mentioned that using the trend in expenditure, approval of the Scheme/projects by the competent authority and committed expenditure, each Ministry would project their requirements in the SBE (Statement of Budget Estimate) format. This will be the basis of the pre-budget discussions to be taken up by the Expenditure Secretary. These discussions will start from October 16 and continue till the first week of November. Based on these discussions, the provisional Budget estimates for FY2021-22 will be finalised.

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For the Budget Estimate (BE) of FY2021-22, the allocation will be finalised based on the accepted recommendations of 15th Finance Commission. The Commission is scheduled to give its recommendations by the end of this month. Devolution formulae to be suggested by the Commission, will be key to finalising the contours of the new budget. It may be noted that the 14th Finance Commission had suggested devolution at the rate of 42 per cent. The 15th Finance Commission, in its interim report for 2020-21, has prescribed 41 per cent devolution with 1 per cent additional for Jammu & Kashmir (which became a Union Territory along with Ladakh in the middle of the fiscal).

The circular has asked all the Ministries and Departments to submit details of all the Autonomous Bodies/Implementing Agencies for which a detailed corpus has been created. The balance of this corpus as on March 31, 2020 needs to be communicated along with the annual expenditure of the last three years and allocation made during the current fiscal year. “The reasons for their continuation and requirement of grant-in-aid support should be explained and why the same should not be wound up,” the circular asked Ministries/Departments to respond.

The Expenditure Secretary will discuss non-tax revenue (NTR) mobilisation and potential with each of the Ministry/Department. The circular said that consequent to pre-budget meetings, the provisional ceilings for expenditure finalised in the initial meetings will be communicated to the Ministry and Department. “The final ceiling for the schemes will be decided separately by the Finance Ministry latest by January 15, 2021, taking into account the resource assessment of the Government and the available fiscal space,” the circular said.

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Published on October 03, 2020
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