Revamping the Budget presentation cycle, the State Cabinet today gave
nod to the proposal of the Finance Department regarding pre-ponement of
the Budget Session of 2016-17 to the 2nd/3rd week of January 2016 and
also starting the practice of having Mid Year Review of the Budget and
Economy. This initiative will help the Government in overcoming
deficiencies in the existing system
and ensure timely release of budget,
the quality of expenditure and avoidance of time and cost over-runs.
Moreover, the new strategy would also put in place institutional
mechanism to utilize Rs 80,000 crore economic package announced by Prime
Minister, Narendra Modi during his recent visit to Jammu and Kashmir.
The Cabinet decided that Department of Law, Justice and Parliamentary
Affairs will, as per the provisions of the State Constitution, process
the matter regarding advancement of Budget Session.
The proposal to revamp the existing system was mooted by the Finance
Minister, Dr Haseeb A Drabu keeping in view the fact that delayed
preparation of Budget, approval and release of funds compromises the
quality of expenditure and many a time non-execution of schemes
resulting in time and cost overruns, official sources told EXCELSIOR.
After thorough deliberations on the proposal of the Finance Department
regarding pre-ponement of Budget Session 2016-17, the State Cabinet,
which met this morning under the chairmanship of Chief Minister, Mufti
Mohammad Sayeed, accorded nod to convening of session of State
Legislature in mid January and presentation of Budget before the
Legislature around January 20 and voting by mid February.
As per the Cabinet decision, the District Development Board meetings
would be held to finalize the developmental plans of each district not
later than last week of March and the budget allocation for the 50% of
the amount under each head including Capex would be released by the end
of February or first week of March to enable the line departments to
make adequate preparation in advance and commence expenditure from April
1.
“This would give them enough time to have definite expenditure policy in
place and to make quality expenditure”, sources said, adding “this
would also facilitate the departments to improve their capacity to make
expenditure and make optimum utilization of funds during the next
fiscal”.
Moreover, this would put in place institutional mechanism to utilize Rs
80,000 crore economic package announced by the Prime Minister, sources
further said, adding “it is imperative now to ensure timely release of
funds to the departments so as to give fillip to the developmental
activities across the State”.
The Cabinet also gave nod to the Mid Term Budget Review to be presented
in the Summer Session to be held around mid-August every year and
duration of 10 days would be extended to allow discussions and voting on
Mid Year or Revised Budget. “The Economic Survey containing complete
facts and figures for the last completed financial year would be
presented in the Summer Session of the Legislature for discussion”,
sources added.
Stating that revamping of Budget exercise would ensure timely release of
funds, quality of expenditure and avoidance of time and cost overruns,
sources said that the Finance Department has already initiated the
process in this regard. “The Budget discussions with all the line
departments have already been completed by the Finance Department and
discussion with various stakeholders-representatives of trade and
industries, chambers of commerce, hoteliers, agriculturists, orchardists
etc will also be held in the near future”, sources added.
Under the existing system, the exercise of Budget preparation starts in
the 2nd half of November and culminates in the 2nd half of February when
the Budget is presented before the Legislature for approval. The Budget
is actually passed by the last week of the March. While the non-plan
expenditure is authorized usually in the first week of April itself, the
plan expenditure takes time before release for want of conclusion of
District Development Board meetings.
Stating that existing system has numerous deficiencies, sources said
that delayed approval of the Budget and release of the same, in
particular of the Capex part, compromises quality of expenditure or in
many cases non-execution of schemes and thereby lapse of the allocated
funds. Moreover, the Budget presented contains the actual figures up to
the month of September or October and for remaining months there is only
rough estimation as a result of which the figures indicated in the
revised estimates don’t tally with that of the actual expenditure at the
end of the financial year.
“Moreover, under the existing system the actual devolution of the
Central Assistance is not known at the time of Budget presentation and
the Central Assistance flows to the States up to March 31 of the
financial year”, sources further said, adding “similarly, at the end of
the financial year, a good amount of Centrally Sponsored Schemes and
Negotiated Loans remain unutilized. Though the amount being non-lapsable
needs to be revalidated in the next year’s Budget, yet this amount is
not at all reflected in the Budget anywhere and thereby creates a
perpetual deficit cycle and liquidity crisis in the treasuries”.
Due to all these factors some critical aspects of the Budget don’t get
reflected properly, not voted in the Legislature and thereby create
uncertainty on the available resources for all kind of expenditure,
sources said, adding “this also results in numerous Audit Paras every
year by the Accountant General of India. Moreover, the quality of
expenditure is severely compromised in addition to delayed or
non-execution of the developmental expenditure”.