Explainer: How much does the Government actually spend compared to Budget allocations?﻿
Sai Krishna Muthyanolla
July 22, 2019
Like in the case of
revenue, the expenditure estimates in the budget do not always translate into
actual spending. Here is a look at the expenditure under various broad heads.
In the previous
article on Union Budget, we explored the actual figures of Union Government’srevenues for 2017-18 and compared them with the estimated figures. In thisarticle, we would explore the estimates of expenditure provided for 2017-18,and the actual expenditure, especially among the various schemes funded by thecentral government.
Expenditure
estimates are based on the recommendations from individual Ministries
The Ministry of Finance comes up with the expenditure estimates, based on the consultation with each individual ministry and department. Each ministry comes up with their estimates for expenditure, which is discussed with NITI Aayog. The finalized expenditure estimates are then shared by each of the ministries with the Finance ministry. These are termed as Demand for Grants. Apart from this, NITI Aayog and Finance ministry hold consultations with experts from various fields for recommendations on policies and schemes. The finance ministry takes into consideration these requests from the ministries along with the various recommendations. Based on the revenue estimates, they come up with the expenditure estimate for each of the ministries.
As we havediscussed in the earlier article on the unionbudget, the actual values can only be ascertained after the completion of thefinancial year. The actual revenue and expenditure once ascertained are auditedbefore they can be presented before the house. Hence, whenever a budget ispresented, the actual figures are for the previous year i.e. in the budget for2019-2020, the actuals are for 2017-18. These actuals offer a good insight tounderstand the actual performance in comparison to the estimate and gives anopportunity to reset the course as required.
Actual
expenditure for 2017-18 higher than the estimates
Like the casein receipts, even the expenditure is categorized as Revenue Expenditure andCapital expenditure. Technically, Revenue expenditure is that expense which neithercreated any new assets nor reduces the liabilities. These expenses are incurredin running government departments and services. They tend to be recurring andshort term in nature. Salaries of the employees, pensions, subsidies, interestpayments, grants are few of the examples of revenue expenditure.
Capitalexpenditure is any expenditure which results in the creation of an assets orreduction of a liability. All the asset creation activities like buildings,roads, purchase of land, investments etc. are considered as capitalexpenditure. Repayment of an existing loan would also be counted as capitalexpenditure as it leads to reduction in the liability.
The unionbudget for 2017-18
estimate the total expenditure at ₹ 25,31,762 crores,whereas the actual expenditure is higher at ₹ 27,52,659 crores. Both the actual revenue and actual expenditure ismore than the estimated figures for the year 2017-18. These number include notjust the expenditure through budget, but the resources of public enterprises also(commonly known as the Public Sector Undertaking or PSUs)
The estimatedrevenue expenditure was ₹ 18,36,934 crores,however the actual revenue expenditure was ₹ 18,78,834 crores. Bulk of the increase is seen in the capitalexpenditure, that too, from the resources of public enterprises. In fact, theactual capital expenditure through budget for 2017-18 is ₹ 2,63,139 crorescompared to the estimated expenditure of ₹ 3,09,800 crores.
Higher actual
spending on flagship Centrally Sponsored Schemes
Governmentschemes play a critical role in contributing towards the development story ofthe country. While each of the states have their own State Government sponsoredschemes in accordance to their own priorities, there are few schemes that aresponsored by the Government of India (GoI). These schemes are aimed atfulfilling national goals like literacy, health, nutrition etc.  GoI schemes are broadly of two types
What about the
Centrally sponsored schemes?
Centrallysponsored schemes are those schemes where the expenditure is
shared between the GoI and the states. These are categorized as Core of Coreschemes, Core schemes and optional schemes.
The total estimated
expenditure for centrally sponsored schemes was ₹ 2,78,433.23 crores, while the actual expenditure for
2017-18 is ₹ 2,85,447.8 crores. MGNREGA occupies a significantportion (nearly 20%) of the expenditure incurred for Centrally sponsoredschemes.
The estimatedexpenditure for of MGNREGA for 2017-18 was ₹ 48,000 crores, however the actual expenditure was more by nearly 15%i.e. ₹ 55,166.04 crores. Swachh Bharath Mission also has an increase in the actualexpenditure with nearly 20% more being spent on the actual estimate of ₹ 16,248.27 crores. National Health Mission, National Rural DrinkingWater Missions and Padhan Mantri Awas Yojna also have recorded actualexpenditure more than the estimated expenditure.
On the otherhand, schemes like Pradhan Mantri Krishi Sinchai Yojna (Irrigation), PradhanMantri Gram Sadak Yojna (Rural roadways) etc. have actual numbers less than theestimated numbers. Schemes focussed on child nutrition, health and educationhave also taken a back seat with the actual expenditure less than the estimatedexpenditure.
The totalestimated expenditure for the three schemes of – National Education Mission,National programme of Mid-day meals in Schools, and ICDS is ₹ 60,310.86 crores, whereas the actual expenditure of these three schemesis ₹ 57,780.5 crores.
Less actual
spending on many of the Central Sector Schemes
Central Sectorschemes are completely funded by the central government unlike Centralsponsored schemes which have state funding collaboration.
The total estimate for expenditure on Central
Sector Schemes was ₹ 6,66,644.02 crores, while the actual spent for 2017-18 is ₹ 5,87,784.99 crores. Of the total expenditure, the estimated revenueexpenditure across various Central sector schemes was ₹ 3,96,459.2 crores while the actual revenue expenditure was ₹ 3,42,187.87 crores.
Even the actual capital expenditure on CentralSector schemes is less than the estimated capital expenditure. The actualcapital expenditure for 2017-18 is ₹ 2,45,597.12 crores, whereas theestimated expenditure was ₹ 2,70,184.78 crores.
The actual expenditure on many of the keyCentral sector schemes for 2017-18 is less than the estimated expenditure ascan be seen from the following chart.
Central Government’s actual spending is less
than the estimated spending for 2017-18
As discussed earlier, the actual spendingfigures give an insight into the real picture. The estimate expenditure onvarious schemes provided in any budget reflect the government’s intent to spendon those particular schemes. It has to be remembered that these estimates areallocations made based on the requests received from various ministries/departmentsand also depend on the priority. These allocated funds if not spent might not fulfilthe purpose of the scheme.
While the government did spend more than theestimate on few of its flagship and highly promoted schemes like Swacch Bharathand Pradhan Mantri Awas Yojana, equal impetus on spending ought to be laid onother key schemes.
The spending on schemes related to educationand health of children are few of such schemes where if the actual spending is asper the allocation, could have a positive impact on the development in thelonger run. Interest Subsidy for Short Term Credit to Farmers, Food Subsidy,Pradhan Mantri Swasthya Suraksha Yojana etc. were such key schemes which couldhave done well if the actual spending was on par with the estimates.