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After a sharp cut in expenditure in the revised estimate for 2012-13 (particularly on the Plan side), compared to the initial allocation, various departments and ministries are planning not to put off expenditure until the end of this financial year.
In Budget 2013-14, the finance ministry cut overall expenditure four per cent — from Rs 14.91 lakh crore in the 2012-13 Budget estimate to the revised estimate of Rs 14.31 lakh crore for 2012-13. For this financial year, overall expenditure was projected at Rs 16.65 lakh crore, 11.69 per cent more than the 2012-13 Budget estimate and 16.38 per cent more than the revised estimate.
In the revised estimate for 2012-13, overall expenditure was cut, despite a 3.27 per cent rise in non-Plan expenditure —Rs 10.02 lakh crore, against Rs 96.99 lakh crore in the Budget estimate. Plan expenditure fell a whopping 16.62 per cent to Rs 4.29 lakh crore, against Rs 5.21 lakh crore in the Budget estimate.
To avoid similar cuts and keep Plan expenditure at Rs 5.55 lakh crore (6.58 per cent higher than the 2012-13 revised estimate and 30 per cent more than the Budget estimate), ministries and departments are gearing up to bring out their expenditure demands from this month.
The finance ministry says it is prepared to meet the enhanced demand.
The rural development ministry is pushing for faster utilisation of funds by states. In 2012-13, its Plan expenditure was cut 29 per cent to Rs 52,000 crore in the revised estimate, against Rs 73,175 crore in the Budget estimate. In 2013-14, funds under Plan expenditure were pegged at Rs 74,429 crore. The ministry has increased the number of man-days under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) 10 per cent compared to last year, say ministry officials. Under the revised estimates, funds allocated to MGNREGS were cut 11 per cent to Rs 29,387 crore in 2012-13, against the Budget estimate of Rs 33,000 crore. This financial year, Rs 33,000 crore would be allocated towards the scheme.
Last month, officials from the ministry met state government officials and told them under MGNREGS, they should work towards recording 10 per cent more man-days of work compared to last year, officials said.
If the number of man-days recorded last year was 1,00,000, the funds being provided are for 1,10,000 man-days. Since wages under MGNREGS have risen in all states, fund disbursals would obviously rise, officials said.
For the Indira Awas Yojana, this year, fund allocation would automatically increase, as the allocation and the unit cost of houses have increased. In 2012-13, this scheme was allocated Rs 9,966 crore in the Budget estimate, under the Plan head in the BE. However, this was reduced to Rs 8,121 crore in the revised estimate, a fall of 18 per cent. For the current financial year, the projected allocation is Rs 13,666 crore, about 37 per cent higher than the 2012-13 Budget estimate.
The Plan allocation towards the Pradhan Mantri Grameen Sadak Yojana was cut 58 per cent to Rs 9,100 crore in the revised estimate for 2012-13 from Rs 21,699 crore in the Budget estimate. For this financial year, it is estimated the scheme would be allocated Rs 15,690 crore. Officials said it would be challenging for the ministry to spend funds under this scheme at a quicker pace, as road projects took time.
A senior official at the Department of Food & Public Distribution said the department was carrying out intensive planning to ensure the entire amount allocated under Plan expenditure for 2013-14 wasn’t spent in the last few months. The department, along with the Department of Consumer Affairs, was initially allocated Rs 367 crore under the Plan head; this was lowered 36 per cent to Rs 235 crore. For the current financial year, the ministry’s allocation is projected at Rs 500 crore.
The official added the department had lined up all deliverable projects with clear-cut timelines. These deliverables have been supplemented by the required hardware and software. “We have also issued clear-cut instructions to all our subordinate offices to send proposals in time with clear timelines,” he added.
Health ministry officials, however, said as of now, they couldn’t comment on what strategy the department would adopt.
The power ministry’s Plan expenditure cut a huge 51 per cent to Rs 4,708 crore in the revised estimate for 2012-13 against Rs 9,642 crore in the Budget estimate. For 2013-14, it is now pegged at the same level as it was in the BE of 2012-13 — Rs 9,642 crore.
A department cannot spend more than a third of its allocation in the last quarter of a financial year (January-March) and more than 15 per cent in the last month (March). Also, they have to provide utilisation certificates for funds allocated in the previous years.
Typically, ministries wait till a Budget is passed in Parliament before demanding their allocations. After the Budget is passed, allocations are taken and approvals sought. By then (May/June), the monsoon covers most of the country. So, no substantial work can actually be done on the ground. Therefore, utilisation certificates aren’t received.
As most substantial work start around October, ministries have very little time to spend the entire allocation, resulting in a lot of unused funds, said an official.
This time, the finance ministry has asked departments to distribute their demands through the year, against the practice of bunching it in the second half of a financial year. The ministry has said it is prepared for more demands from the first quarter. At the end of 2012-13, the government had a cash balance of about Rs 80,000 crore; these funds could be released in the first quarter.
“Besides, the vote-on-account has been passed. Till the Budget is passed in May, departments can withdraw a sixth of their Budget estimate from that account,” said a finance ministry official. Typically, vote-on account is for expenditure incurred during April and May.
However, this expenditure cannot be incurred on any new scheme.
