Resources (Revenues)Side
Leaving aside the tax receipts, the other sources of
revenue which go into the Budget are the dividends
paid by the PSUs on the government shareholdings,
including the interim dividends and the capital
receipts on account of the divestment of the government
share holdings.
Besides external receipts on account borrowing from
international agencies like World Bank, ADB, etc., are
also estimated and included in the assessment of the
gross budgetary resources of various programmes under various ministries.
Resources of the public sector undertakings, including
their operating surplus and the borrowings by
them, also constitute an important component of the
gross budgetary resources and goes to fund their plan.
The general policy is to fund the plans of the PSUs
through their own resources except in some strategic
and economically vital areas where the budgetary
support is provided based on the recommendations of
the Planning Commission.
This assessment of
the Internal and
External Budgetary
Resources (IEBR)
conducted by the
Depar tment of
Expenditure forms
part of the total
plan resources and
is also reflected in
the budget documents.
To estimate the
earnings of PSUs,
the government
invites CMDs or
the finance
directors of the
PSUs to the North Block. A joint secretary level officer
of the ministry of finance holds one-on-one meeting
with the PSU chairmen and estimates revenue.
He passes on the information to Expenditure
Secretary, who in turn, passes on the information to
Finance Secretary. This exercise starts usually in the
month of August/September. This revenue forms a
part of plan expenditure.
Now comes the role of the ministries of the government.
Each ministry has a financial advisor. The
financial advisor is called by the ministry of finance and asked about the expenditure of the amount
allocated to his ministry.
Generally, ministries are
not able to spend the
allocated amount but
some may overspend as
well.
Based on the inputs of different ministries Revised
Estimate (RE) is prepared. Revised Estimate means as
to how much is actually required by the ministry.
As a part of the expenditure management, the
government has
issued instructions
to various ministries
to adhere to the quarterly expenditure
schedule and to
avoid bunching of
the expenditure in
the last quarter.
Additional funds
are also provided
in the RE stage.
Important is the
estimates of the
non-plan requirement
for the next year.
Plan allocations are to be provided by the Planning
Commission later based on the total Gross Budgetary
Support (GBS) indicated by the ministry of finance.
This exercise starts in the month of October-
December.
As is known, the Department of Revenue, the ministry
of finance has two boards - Central Board of
Direct Taxes (CBDT) and Central Board of Excise and
Customs (CBEC). By mid-January, these boards give
the figure of tax collection up to December 31. For the remaining three months, tax collection is assumed on
the basis of previous trends.
The boards also estimate the tax revenue expected in
next financial year. The integrity of the budget
making depends on the realistic nature of these
estimates.
Expenditure side
Parallel to all this, the Planning Commission goes
into stock-taking mode. It starts meeting with
individual ministries in the month of September-
October and reviews ongoing schemes of the ministries,
considers allocation for them, etc. It may decide
to stop some ongoing scheme or merge two similar
schemes.
Thus, an estimate of Plan Budget is prepared. The
Planning Commission conveys to the ministry of
finance that it requires so and so amount to run
planned schemes for next financial year.
The finance minister and the Deputy Chairman of
Planning Commission discuss the
demand in detail. This way
Plan Expenditure is
ready. Different
ministries are also
expected to
inform their
fund requirement,
which
forms a part
of the budget
estimate.
Side by side,
Depar tment of
Economic Affairs
meets representatives of
trade unions, industry chambers,
economists and other groups. In the Budgetmaking
exercise, suggestions of different stakeholders
are kept in mind.
