Budget rationalisation: CAG proposals may have to wait

The recommendation of the Comptroller and Auditor General (CAG) to ‘rationalise the budget preparation exercise’ to bridge the ‘persisting gap between the budget

The recommendation of the Comptroller and Auditor General (CAG) to ‘rationalise the budget preparation exercise’ to bridge the ‘persisting gap between the budget estimates and actuals’ may have to wait for some time, officials familiar with the matter said.

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Incorporating these proposals in the state’s annual budget for 2020-2021 may not be possible now as the annual budget preparation exercise has been stepped up further and it is now in its final stages.

The Yogi Adityanath government is expected to present the annual budget for 2020-2021 in February-March 2020.

“We are preparing the annual budget for 2020-2021 and the CAG’s recommendations on the issue may be considered at a later stage,” said a senior officer on condition of anonymity.

The CAG, in one of its reports tabled in the state legislature on December 17, 2019, had recommended: “The finance department should rationalise the budget preparation exercise, so that the persisting gap between the budget estimate and actuals are bridged.”

The report was for the year that ended on March 31, 2019.

“Shortfalls of actual receipts and expenditure against budget estimates, either due to unanticipated and unforeseen event or under/over estimation of expenditure or revenue at the stage of budget preparation, adversely impacts the desired fiscal objectives,” the CAG observed, giving a detailed account of the state government’s receipts and expenditure.

As the CAG also pointed out excess disbursement of Rs 1337.17 crore (Rs 13.37 billion) over the budgeted amount for 2017-2018, the state government may also take steps to regularise the excess expenditure.

An excess disbursement of Rs 29,648.64 crore (Rs 296.48 billion) under 96 grants and 40 appropriations pertaining to the years 2005-2006 to 2016-2017 was also yet to be regularised by the state legislature, observed the CAG.

In one of the new measures, the state government decided to create a new budget head of “land purchase” to ensure the total amount spent on buying land was available with the authorities at one point.

The state government faces the challenge of mobilising additional resources for various ongoing infrastructure and development projects as chief minister Yogi Adityanath may like to incorporate some new schemes in the annual budget for 2020-2021, which comes about two years before the 2022 assembly elections.

Earlier, the state finance department had asked all the departments to ensure that the budgetary estimates sent to it were complete and correct.

In a letter dated September 25, 2019 and sent to the departments, additional chief secretary, finance, Sanjiv Mittal said, “Estimates should be close to reality and correct.”

Mittal, in his letter, further said the officers should keep in mind that making additional provisions for an amount that may be saved was as big a financial irregularity as was incurring expenditure in excess of the sanctioned amount.

Mittal, in his letter, also referred to the provisions of Uttar Pradesh Fiscal Responsibility and Budget Management Act 2004 and said while preparing the budget estimates, all the departments should review all the ongoing programmes. The schemes, which were no longer useful, should be closed, he said.

He said wasteful expenditure must be checked instead of appointing employees on contract basis. The senior officer suggested the departments should consider getting the whole work done on contract in order to cut costs.