Telangana State is gearing up to make meaningful changes in its annual budget preparation process in line with the Union Government’s proposal to go for early budget presentation as well as uniform budget format across the country and do away with the concept of Plan and Non-Plan budget expenditure. The State’s budget proposals will be finalised after the Union budget is presented.
Finance department sources said that budget format would change in line with the Centre’s directive. “We are identifying the changes and soon the budget exercise will kick in. The Union Government issued budget circular in September last week and the State Government will be sending the circular to departments for their proposals soon,” they said.
New classification
Sources said that the budget expenditure for 2017-18 will be classified into revenue and capital expenditure. This was one of the recommendation made by the Administrative Reforms Commission to the Union Government way back in 2011.
Such a classification, for one, helps to make the allocation based on requirements, facilitate departments go for multi-year planning and meet the life cycle of a project expenditure.
Hitherto, resources were being spread thinly across the schemes. Even as the existing schemes were incomplete, new ones were introduced. The idea behind the change is to complete ongoing schemes by allocating available resources judiciously and rationalise allocation of resources. Such a shift will help the government to announce new schemes with responsibility based on resource mobilisation, sources added.
Productive expenditure
For many States, bulk of the budgetary expenditure was under non-plan, comprising salaries, pensions, debt servicing and welfare schemes. Only meagre part of State’s own revenue is left for capital expenditure and bulk of plan expenditure came through Central assistance and market borrowings.
Conventionally, an impression gained ground that the Plan expenditure is productive and non-plan is unproductive but it is not true, say experts. Though in the first two Five Year Plans or Annual Plans, 70 per cent of the Plan expenditure used to be capital expenditure for asset creation like irrigation and infrastructure projects. Over the period of time, due to shift in government priorities, 70 per cent of plan expenditure was spent on social welfare schemes like ICDS, MNREGA, pensions but they did not translate into tangible human development index either.
