Budget 2024: 'We have to be intelligent'

'The global situation is not very good.'

The finance ministry's expenditure management will take into account crises that may arise due to the Israel-Hamas conflict, a senior government official said.

This will enable the ministry to reprioritise spending.

"We have to be intelligent in planning expenditure as the global situation is not very good," the official said.

The ministry's monthly economic review for September said '(fraught) geopolitical conditions', including the recent developments in the Persian Gulf, relentless supplies of US treasuries, and continued restrictive monetary policy in the US, could affect economic activities in other countries, including India.

Now in the process of holding pre-Budget discussions with various ministries on their demands for next financial year, the finance ministry has completed talks on 35 of the total of 102 demands.

The finance ministry has asked the ministries and central government departments to take stock of the unspent balance in the Treasury Single Account (TSA) and the State Nodal Account (SNA) and acknowledge that before submitting their demands.

The new accounting mechanisms in the Public Finance Management System are the TSA for central government agencies and autonomous bodies, and the SNA for distributing centrally sponsored schemes' funds to states.

The pre-Budget discussions are expected to conclude on November 14. The finance ministry, meanwhile, will continue its push for capital expenditure (capex) in the third quarter.

No restriction on capex push in Q3

According to latest finance ministry data, capex has crossed 50 per cent of the Budget Estimate (BE) for FY24.

The official, while indicating that the number was expected to reach 80 per cent of the BE by the end of third quarter, said the government would take stock of the situation to assess if there was room for a further push in the fourth quarter.

"As of now expenditure and receipts are going as predicted and there is no reason to believe we will not meet the 5.9 per cent fiscal deficit target this year," the official added.

The ministry, however, is concerned about the increased demand for jobs under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

"The Budget outlay becomes a demand creating (figure). We will take a look at what is available within the limits of prudence," the official added.

The ministry is confident unlike last year the difference between the Budget and Revised Estimates of the fertiliser subsidy will not be much.

There was a more than 100 per cent increase in the Revised Estimate for fertiliser subsidy in FY23 as against the Budget Estimate.

Small savings on the rise

Collection in the senior citizens' savings scheme as of September 2023 increased 160 per cent Rs 74,675 crore (Rs 746.75 billion) as against Rs 28,715 crore (Rs 287.15 billion) last year.

Collection till the second quarter of FY24 for the Mahila Samman Savings Scheme touched Rs 13,512 crore (Rs 135.12 billion).

It is expected the surge in net collection can reduce dependence on market borrowing.

The official said this had given the government more flexibility in its borrowing programme.

"We would like to keep our debt at a manageable level. We have seen a fall in overall debt. Average tenures of borrowing are in excess of 13 years," the person added.

Union Finance Minister Nirmala Sitharaman recently said the government was looking at ways to bring down its debt.

India's external debt-to-GDP ratio declined to 18.6 per cent at the end of June from 18.8 per cent at the end of March 2023, according to the Reserve Bank of India data.

Feature Presentation: Ashish Narsale/Rediff.com