Initial indications from Inter-Ministerial meetings on the Budget show no significant cuts in allocations for various Ministries. It will be reflected in Revised Estimate (RE). Still, Finance Ministry could get high savings thanks to the new accounting mechanism.

Inter-Ministerial meetings to finalise Revised Estimate for Fiscal Year 2022-23 and the first print of Budget Estimate (BE) for Fiscal Year 2023-24 began on October 10 and will continue till November 11. “Finance Ministry officials have not given any hint about allocation cuts, and it seems RE for many Ministries/Departments could be close to or even higher than BE,” a senior government official told businessline.

However, departments and ministries such as Fertiliser and Food will see higher RE as government has already announced increasing the subsidy payout by ₹1.10-lakh crore and ₹44,762 crore. RE for FY23 will be presented along with BE for FY24 as part of new Budget which is likely to be announced on February 1.

Key contributor

The government has provided over ₹39-lakh crore under 102 Demands for Grants related with 55 Central Ministries and Departments in FY23. The Ministry sources said that even after no ‘significant cuts’, and higher allocation for some of Ministries and Departments, government could still manage some savings. “Key contribution will come from new accounting mechanism which is categorised into two – Treasury Single Account (TSA) and Central Nodal Agency (CNA)/Single Nodal Agency (SNA),” he said. These help in better cash management, he said.

TSA refers to a system where money is in Consolidated Fund of India (CFI) through an account maintained by Reserve Bank of India. The money to various institutions will go only when they are ready to spend and not automatically transferred to their account. Money under TSA, until specified rolling, will lapse on March 31.

CNA is for Central Sector Schemes (which are 100 per cent funded by government) and SNA is for Centrally Sponsored Scheme (which are funded jointly by Centre and States with major share by Centre). Under both the mechanisms, an account is opened with a commercial bank and money is be put from CFI. Now, money will go to recipients only when expenditure takes place and only after meeting certain stipulations. Also, interest earned on funds in these accounts will be collected by the Centre itself, as opposed to the concerned agencies remitting to the Centre.

What govt gets

The official explained that all this will help in reducing float of funds and so overall interest cost will come down. According to budget document for FY23, the government gets around 35 paise out of its receipt of ₹1 from ‘Borrowing and other Liabilities’ while spends 20 paise out of ₹1 spent on interest. Just in time release of fund will help the Centre borrow less and this will save interest, the official said.

Expectation is that overall savings in FY23 could be in the range of ₹80,000 crore.

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