*Mid-term review to be held in August every year
Mohinder Verma
JAMMU, Nov 19: 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”.
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