The last decade has witnessed a substantial improvement in the sanctity and credibility of the Union Budget, leaving past constraints and archaic practices behind.
Guided by PM Shri @narendramodiâs vision of transparency, efficiency and effectiveness in governance, our government has reshaped the budget from a mere record of expenditures into a strategic blueprint for equitable development.
Our budgets are characterized by fiscal prudence, transparency, and inclusiveness, ensuring investments in social development and infrastructure.
We make judicious & efficient use of every rupee collected from our taxpayers and give them a transparent picture of public finances.
Various historic decisions and reforms have been taken by our government to strengthen and bring transparency to the Budgetary process and practices.
Advancement of Budget Cycle:
- Since FY 2017-18, the budget presentation has been shifted to 1st February instead of the last working day in February. It effectively advanced the expenditure cycle by 2 months.
Prior to this reform, the authorization from Parliament through âvote-on-accountâ was available only for the first 2 months of financial year.
- Now, the entire budgetary exercise, including the legislative process, is completed well before the start of the financial year. This has improved administrative efficiency and delivery of schemes as Ministries have the full budget available from the beginning of the financial year â 1 April.
- This has also empowered the State governments, which used to present the Budget earlier than the Centre. States are now able to plan their own budgets better as they are now aware of details of the Centreâs fiscal plan for the upcoming year.
This reform helps the state governments plan their project financing, counterpart funding, implementation of central projects, and borrowing requirements well in advance.
- The advancement of the budget cycle aided the synchronisation of financial outlays and expenditures between the Centre and the States.
Merger of Rail Budget with General Budget:
- The presentation of a separate railway budget was a colonial practice that commenced in 1924. The practice continued more as a convention than for sound administrative reasons.
- From FY 2017-18, our government merged the Railway Budget with the Union Budget to bring the affairs of the Railways to centre stage and present a holistic & transparent picture of the Union Governmentâs financial position.
- Number of Demands for Grants operated by Railways has been reduced from 16 to one, and appropriation for Railways is part of the main Appropriation Bill.
Plan and Non-Plan Classification of budget and accounts removed:
- Since FY 2017-18, the distinction between Plan and Non-Plan classification in budget and accounts has been removed, and the emphasis has shifted to the overall financial allocation of schemes with bifurcation on revenue and capital expenditure.
- Earlier, budgetary allocations were categorized as âPlanâ and âNon-Planâ â where Plan referred to allocations on programmes and schemes, while Non-Plan denoted establishment items.
This artificial distinction created a distortion in the perception of the two types of allocations.
- Plan was considered âgoodâ and often referred to as Developmental expenditure, while Non-plan was considered âbadâ and wrongly signified ânon-developmental outlaysâ.
- This distinction and perception were incorrect as there was a reluctance to allocate for ânon-plan expenditureâ, which comprised items such as maintenance of the defence systems, social security-related allocation (pension and insurance), various welfare measures and subsidies for the poor and underprivileged, etc.
These couldnât be termed as ânon-developmentalâ while allocating resources.
(1/5)
Guided by PM Shri @narendramodiâs vision of transparency, efficiency and effectiveness in governance, our government has reshaped the budget from a mere record of expenditures into a strategic blueprint for equitable development.
Our budgets are characterized by fiscal prudence, transparency, and inclusiveness, ensuring investments in social development and infrastructure.
We make judicious & efficient use of every rupee collected from our taxpayers and give them a transparent picture of public finances.
Various historic decisions and reforms have been taken by our government to strengthen and bring transparency to the Budgetary process and practices.
Advancement of Budget Cycle:
- Since FY 2017-18, the budget presentation has been shifted to 1st February instead of the last working day in February. It effectively advanced the expenditure cycle by 2 months.
Prior to this reform, the authorization from Parliament through âvote-on-accountâ was available only for the first 2 months of financial year.
- Now, the entire budgetary exercise, including the legislative process, is completed well before the start of the financial year. This has improved administrative efficiency and delivery of schemes as Ministries have the full budget available from the beginning of the financial year â 1 April.
- This has also empowered the State governments, which used to present the Budget earlier than the Centre. States are now able to plan their own budgets better as they are now aware of details of the Centreâs fiscal plan for the upcoming year.
This reform helps the state governments plan their project financing, counterpart funding, implementation of central projects, and borrowing requirements well in advance.
- The advancement of the budget cycle aided the synchronisation of financial outlays and expenditures between the Centre and the States.
Merger of Rail Budget with General Budget:
- The presentation of a separate railway budget was a colonial practice that commenced in 1924. The practice continued more as a convention than for sound administrative reasons.
- From FY 2017-18, our government merged the Railway Budget with the Union Budget to bring the affairs of the Railways to centre stage and present a holistic & transparent picture of the Union Governmentâs financial position.
- Number of Demands for Grants operated by Railways has been reduced from 16 to one, and appropriation for Railways is part of the main Appropriation Bill.
Plan and Non-Plan Classification of budget and accounts removed:
- Since FY 2017-18, the distinction between Plan and Non-Plan classification in budget and accounts has been removed, and the emphasis has shifted to the overall financial allocation of schemes with bifurcation on revenue and capital expenditure.
- Earlier, budgetary allocations were categorized as âPlanâ and âNon-Planâ â where Plan referred to allocations on programmes and schemes, while Non-Plan denoted establishment items.
This artificial distinction created a distortion in the perception of the two types of allocations.
- Plan was considered âgoodâ and often referred to as Developmental expenditure, while Non-plan was considered âbadâ and wrongly signified ânon-developmental outlaysâ.
- This distinction and perception were incorrect as there was a reluctance to allocate for ânon-plan expenditureâ, which comprised items such as maintenance of the defence systems, social security-related allocation (pension and insurance), various welfare measures and subsidies for the poor and underprivileged, etc.
These couldnât be termed as ânon-developmentalâ while allocating resources.
(1/5)
Transparency in Budget numbers:
- Our government has prioritized transparency in its budgeting practices and numbers.
- This starkly contrasts the @INCIndia-led UPA governmentâs repetitive practice of hiding the deficits through off-budget borrowings and issuance of âOil Bondsâ, which somewhat covertly shifted the fiscal burden to future generations.
Under UPA, standard fiscal practices were routinely changed to make Budget numbers look favourable.
- Countries with transparent budgets are often viewed more favourably by international bodies such as the IMF and World Bank. This can lead to improved global trust.
- In FY 2020-21, the Government repaid all outstanding National Small Saving Fund (NSSF) loans provided to FCI in lieu of food subsidy by providing additional budgetary support.
- Despite the increase in food subsidy allocations after COVID-19, complete food subsidy is being provided transparently through the Government budget.
- From FY 2021-22, Off-budget funded schemes are being proactively disclosed in the Budget documents. Additionally, steps have been taken to settle Extra Budgetary Resources (EBR) liabilities wherever prepayment is feasible.
For instance, âč33,000 crore provided as an NSSF loan to support the implementation of PMAY (U) schemes has been fully prepaid by providing additional budgetary allocation in the demand of the Ministry of Housing and Urban Affairs in FY 2021-22.
- Budget allocations of key Infra-Ministries such as M/o Road Transport and Highways and M/o Railways have been significantly enhanced from FY 2022-23 and 2023-24, respectively, thereby reducing their dependence on market borrowings.
Rationalisation of Supplementary Demand for Grants:
- Usually, three Supplementary Demands for Grants were presented in Parliament during a financial year to seek additional appropriations or to make substantial reallocations within the appropriations already granted in the regular Budget.
- From FY 2022-23, it was decided to limit the number of Supplementary Demands for Grants to two, now presented during Winter and Budget Sessions. This has made substantive improvements in the process of budget estimation and improved financial discipline.
Revised New Service (NS) /New Instrument of Services (NIS) Norms and financial Limits:
- Our government recently took the initiative to revise the Delegation of Financial Power Rules 1978 (DFPR) and New Service (NS) / New Instrument of Service (NIS) Financial Limits of 2006.
- The NS/NIS limit approved in 2006 needed to be revisited, both on the financial basis and conceptual basis. Without an increase in NS/NIS limits, activities involving small amounts were being held back for the approval of Parliament.
- This also increased the volume of information & proposals, which limited the ability of the Parliament to ensure proper scrutiny and oversight of important items.
- The revised limits have been laid down, taking into account the substantial growth of the government budget, development in the budgeting and accounting practices, the need for retaining administrative efficiency, optimizing the reallocation, and enhancing the Parliament scrutiny and oversight on substantive cases of NS/NIS
- This revision enables administrative ministries/departments to reallocate savings, arising within the limits prescribed by the Parliament, amongst its respective activities, thereby enabling timeliness in the implementation of schemes/projects and swift decision-making.
(2/5)
- Our government has prioritized transparency in its budgeting practices and numbers.
- This starkly contrasts the @INCIndia-led UPA governmentâs repetitive practice of hiding the deficits through off-budget borrowings and issuance of âOil Bondsâ, which somewhat covertly shifted the fiscal burden to future generations.
Under UPA, standard fiscal practices were routinely changed to make Budget numbers look favourable.
- Countries with transparent budgets are often viewed more favourably by international bodies such as the IMF and World Bank. This can lead to improved global trust.
- In FY 2020-21, the Government repaid all outstanding National Small Saving Fund (NSSF) loans provided to FCI in lieu of food subsidy by providing additional budgetary support.
- Despite the increase in food subsidy allocations after COVID-19, complete food subsidy is being provided transparently through the Government budget.
- From FY 2021-22, Off-budget funded schemes are being proactively disclosed in the Budget documents. Additionally, steps have been taken to settle Extra Budgetary Resources (EBR) liabilities wherever prepayment is feasible.
For instance, âč33,000 crore provided as an NSSF loan to support the implementation of PMAY (U) schemes has been fully prepaid by providing additional budgetary allocation in the demand of the Ministry of Housing and Urban Affairs in FY 2021-22.
- Budget allocations of key Infra-Ministries such as M/o Road Transport and Highways and M/o Railways have been significantly enhanced from FY 2022-23 and 2023-24, respectively, thereby reducing their dependence on market borrowings.
Rationalisation of Supplementary Demand for Grants:
- Usually, three Supplementary Demands for Grants were presented in Parliament during a financial year to seek additional appropriations or to make substantial reallocations within the appropriations already granted in the regular Budget.
- From FY 2022-23, it was decided to limit the number of Supplementary Demands for Grants to two, now presented during Winter and Budget Sessions. This has made substantive improvements in the process of budget estimation and improved financial discipline.
Revised New Service (NS) /New Instrument of Services (NIS) Norms and financial Limits:
- Our government recently took the initiative to revise the Delegation of Financial Power Rules 1978 (DFPR) and New Service (NS) / New Instrument of Service (NIS) Financial Limits of 2006.
- The NS/NIS limit approved in 2006 needed to be revisited, both on the financial basis and conceptual basis. Without an increase in NS/NIS limits, activities involving small amounts were being held back for the approval of Parliament.
- This also increased the volume of information & proposals, which limited the ability of the Parliament to ensure proper scrutiny and oversight of important items.
- The revised limits have been laid down, taking into account the substantial growth of the government budget, development in the budgeting and accounting practices, the need for retaining administrative efficiency, optimizing the reallocation, and enhancing the Parliament scrutiny and oversight on substantive cases of NS/NIS
- This revision enables administrative ministries/departments to reallocate savings, arising within the limits prescribed by the Parliament, amongst its respective activities, thereby enabling timeliness in the implementation of schemes/projects and swift decision-making.
(2/5)
Increase in the corpus of Contingency Fund of India:
- Contingency Fund is an imprest mechanism laid down by the Constitution to facilitate Centre in meeting unforeseen expenditures that arise when the Parliament is not in Session.
- The corpus of this Fund, however, remained a meagre âč500 crore from FY 2006 despite an exponential increase in the budget over the years. Problem of a low corpus was felt acutely during Covid-19 when the Parliament couldnât meet and conduct business.
- Our Govt increased the corpus of the Contingency Fund to âč30,000 crore from âč500 crore with the approval of Parliament in FY 2022.
Digital Budget:
- Over the years, our Budget documents are simplified in terms of language, focusing on basic English/Hindi, (therefrom translated to other regional languages) so readers across the country can understand our plans for the year. This has been done without compromising transparency, as all relevant data and documents are provided in annexures.
- Before 2021, the budget documents (14 in number) were printed in large quantities and distributed amongst MPs. To strive for a greener budget, our government, from FY 2021-22, has been presenting the budget digitally, and electronic copies of budget documents are distributed to MPs.
- This green initiative has reduced the number of printed copies and made the process of laying the budget in Parliament seamless.
(3/5)
- Contingency Fund is an imprest mechanism laid down by the Constitution to facilitate Centre in meeting unforeseen expenditures that arise when the Parliament is not in Session.
- The corpus of this Fund, however, remained a meagre âč500 crore from FY 2006 despite an exponential increase in the budget over the years. Problem of a low corpus was felt acutely during Covid-19 when the Parliament couldnât meet and conduct business.
- Our Govt increased the corpus of the Contingency Fund to âč30,000 crore from âč500 crore with the approval of Parliament in FY 2022.
Digital Budget:
- Over the years, our Budget documents are simplified in terms of language, focusing on basic English/Hindi, (therefrom translated to other regional languages) so readers across the country can understand our plans for the year. This has been done without compromising transparency, as all relevant data and documents are provided in annexures.
- Before 2021, the budget documents (14 in number) were printed in large quantities and distributed amongst MPs. To strive for a greener budget, our government, from FY 2021-22, has been presenting the budget digitally, and electronic copies of budget documents are distributed to MPs.
- This green initiative has reduced the number of printed copies and made the process of laying the budget in Parliament seamless.
(3/5)
Resources are also borrowed, apart from collected revenue, to finance the development agenda.
Various expenditure reforms have helped save interest costs while building transparency and efficiency in Treasury management.
This is critical as it reduces the wastage of crucial resources, allowing them to be utilized for welfare measures. It also ensures that every rupee collected from taxpayers is used with utmost efficiency.
Various measures have been taken to improve expenditure efficiency by reducing unspent and parked funds at various levels.
Treasury Single Account (TSA):
Previously, Grants were released to various Autonomous Bodies (ABs) and Implementing agencies (IEs) periodically (quarterly or half-yearly), leading to funds remaining unutilized for a long time and resulting in substantial interest costs for the Centre.
To rectify this, TSA reform was introduced in 2017-18, eliminating bulk releases to ABs.
ABs now open accounts with RBI, and Ministries issue e-assignments (limits) through 'PFMS-e-kuber' interface instead of releasing cash. The 'PFMS-e-kuber' interface is used to disburse and spend funds.
This led to 'just-in-time' release of funds to Autonomous Bodies and lowered the borrowing costs for the Centre.
Reform of TSA was further leveraged in FY 2021-22 for releases under Central Sector schemes to Implementing agencies, having outlay of more than Rs 500 crores.
TSA has covered over 3000 Implementing agencies and a total of around Rs. 5 lakh crores of Union Budget till FY 2023-24. It is important to mention that even the large agencies such as ICMR, UGC, BSNL, NHAI etc., are receiving funds from the Government through TSA.
TSA has resulted in savings of more than Rs. 15,000 crores to date.
For 221 Central Sector schemes (100% central funding) with an annual outlay of less than Rs. 500 crores, a scheme-wise Central Nodal Agency (CNA) was introduced, restricting the actual flow of funds to only one level, i.e., CNA. This was done by leveraging the PFMS linkage with banks.
The unutilized parked funds with second-level and down-the-line agencies were reduced to zero by having them open âZero Balance Saving Accountsâ. The flow of funds occurs in real-time, ensuring actual disbursement to beneficiaries/vendors on a âjust-in-time' basis.
This new system resulted in funds being transferred and float monitoring for only 894 bank accounts of first-level agencies, a substantial reduction from the need for monitoring 60,000 bank accounts under the previous system.
(4/5)
Various expenditure reforms have helped save interest costs while building transparency and efficiency in Treasury management.
This is critical as it reduces the wastage of crucial resources, allowing them to be utilized for welfare measures. It also ensures that every rupee collected from taxpayers is used with utmost efficiency.
Various measures have been taken to improve expenditure efficiency by reducing unspent and parked funds at various levels.
Treasury Single Account (TSA):
Previously, Grants were released to various Autonomous Bodies (ABs) and Implementing agencies (IEs) periodically (quarterly or half-yearly), leading to funds remaining unutilized for a long time and resulting in substantial interest costs for the Centre.
To rectify this, TSA reform was introduced in 2017-18, eliminating bulk releases to ABs.
ABs now open accounts with RBI, and Ministries issue e-assignments (limits) through 'PFMS-e-kuber' interface instead of releasing cash. The 'PFMS-e-kuber' interface is used to disburse and spend funds.
This led to 'just-in-time' release of funds to Autonomous Bodies and lowered the borrowing costs for the Centre.
Reform of TSA was further leveraged in FY 2021-22 for releases under Central Sector schemes to Implementing agencies, having outlay of more than Rs 500 crores.
TSA has covered over 3000 Implementing agencies and a total of around Rs. 5 lakh crores of Union Budget till FY 2023-24. It is important to mention that even the large agencies such as ICMR, UGC, BSNL, NHAI etc., are receiving funds from the Government through TSA.
TSA has resulted in savings of more than Rs. 15,000 crores to date.
For 221 Central Sector schemes (100% central funding) with an annual outlay of less than Rs. 500 crores, a scheme-wise Central Nodal Agency (CNA) was introduced, restricting the actual flow of funds to only one level, i.e., CNA. This was done by leveraging the PFMS linkage with banks.
The unutilized parked funds with second-level and down-the-line agencies were reduced to zero by having them open âZero Balance Saving Accountsâ. The flow of funds occurs in real-time, ensuring actual disbursement to beneficiaries/vendors on a âjust-in-time' basis.
This new system resulted in funds being transferred and float monitoring for only 894 bank accounts of first-level agencies, a substantial reduction from the need for monitoring 60,000 bank accounts under the previous system.
(4/5)
Single Nodal Agency (SNA):
Union Govt administers 108 Centrally Sponsored Schemes (CSS) through State and UT governments, with a budget of approximately Rs. 5.01 lakh crores for FY 2024-25 and Rs. 4.76 lakh crores for FY 2023-24.
Previously, it was challenging to ascertain the timeliness and amount of funds released to the implementing agencies under a CSS and to determine whether the funds were from the Centre or the State.
Under the SNA model, each State has to identify and designate a Single Nodal Agency (SNA) for every Centrally Sponsored Scheme (CSS).
State Governments are required to transfer the CSS funds received from the Centre and their corresponding share within a stipulated period to the single nodal bank account opened in a scheduled commercial bank.
The Single Nodal Agency then creates virtual spending limits for the down-the-line agencies to incur expenditures against the particular scheme, such as MGNREGA, PMAY, etc. The money remains in the single nodal account, with only limits assigned.
Money in a single nodal bank account also earns interest. Interest accrued in SNA bank accounts has resulted in savings of approximately Rs. 10,592 crores from 2021-22 to date.
Effective implementation of the SNA model has brought about greater efficiency in CSS fund utilization, tracking of funds, and pragmatic and just-in-time release of funds to the States, ultimately contributing to better cash management and savings for the Government.
The unspent balance parked in more than 15 lakh bank accounts of implementing agencies was consolidated into 4500 bank accounts of SNAs.
The SNA System also significantly reduced the possibility of fund diversion by the State or Implementing Agencies earmarked for a particular Centrally Sponsored Scheme.
SNA- SPARSH is also rolled out on a pilot basis, which further seeks to streamline the 'Just-in-time' fund flow to the end beneficiary from Centre and State Consolidated Funds through an integrated network of PFMS, State IFMIS and e-kuber of RBI.
Our Government, led by PM Sh. @narendramodi is committed to harnessing cutting-edge technology, enhancing transparency, and pursuing ongoing reforms to lay a strong foundation for a Viksit Bharat.
We will continue to maximize the value and impact of hard-earned taxpayer money, ensuring it is put to the best possible use for the benefit of all.
(5/5)
Union Govt administers 108 Centrally Sponsored Schemes (CSS) through State and UT governments, with a budget of approximately Rs. 5.01 lakh crores for FY 2024-25 and Rs. 4.76 lakh crores for FY 2023-24.
Previously, it was challenging to ascertain the timeliness and amount of funds released to the implementing agencies under a CSS and to determine whether the funds were from the Centre or the State.
Under the SNA model, each State has to identify and designate a Single Nodal Agency (SNA) for every Centrally Sponsored Scheme (CSS).
State Governments are required to transfer the CSS funds received from the Centre and their corresponding share within a stipulated period to the single nodal bank account opened in a scheduled commercial bank.
The Single Nodal Agency then creates virtual spending limits for the down-the-line agencies to incur expenditures against the particular scheme, such as MGNREGA, PMAY, etc. The money remains in the single nodal account, with only limits assigned.
Money in a single nodal bank account also earns interest. Interest accrued in SNA bank accounts has resulted in savings of approximately Rs. 10,592 crores from 2021-22 to date.
Effective implementation of the SNA model has brought about greater efficiency in CSS fund utilization, tracking of funds, and pragmatic and just-in-time release of funds to the States, ultimately contributing to better cash management and savings for the Government.
The unspent balance parked in more than 15 lakh bank accounts of implementing agencies was consolidated into 4500 bank accounts of SNAs.
The SNA System also significantly reduced the possibility of fund diversion by the State or Implementing Agencies earmarked for a particular Centrally Sponsored Scheme.
SNA- SPARSH is also rolled out on a pilot basis, which further seeks to streamline the 'Just-in-time' fund flow to the end beneficiary from Centre and State Consolidated Funds through an integrated network of PFMS, State IFMIS and e-kuber of RBI.
Our Government, led by PM Sh. @narendramodi is committed to harnessing cutting-edge technology, enhancing transparency, and pursuing ongoing reforms to lay a strong foundation for a Viksit Bharat.
We will continue to maximize the value and impact of hard-earned taxpayer money, ensuring it is put to the best possible use for the benefit of all.
(5/5)
Loading suggestions...