Expenditure panel wants a realistic budget

THIRUVANANTHPAURAM: Kerala Public Expenditure Review Committee wants finance ministers to desist from using the Budget presentations the way door-to-door salespeople utilise the chance to sell their wares: make a wild sales pitch. 
The panel in its 2017 report has noted that budget estimates deviated from actuals by a wide margin during the former UDF government’s tenure. The committee said that this had seriously affected capital and plan expenditure. Since 2011-12, the Budget Estimates (BE), Revised Estimates (RE), and Accounts have seen large-scale variation. 

The RE varied from the BE by a large margin, and the accounts (which are the audited final figures) varied from the RE hugely. These variations were large in respect of revenue receipts as well as revenue expenditures, resulting in huge gaps between budget promises and reality.  Take for instance revenue receipts in 2015-16. The then finance minister Oommen Chandy had said that the state would collect '85,259 crore as taxes during the fiscal. Eventually, the state received just '78,689 crore at the end, a difference of Rs Rs 6,570 crore. The illusory figure has the advantage of keeping deficit low  at the time of presenting the budget, giving the finance minister a faux smart image.

However, there is a pattern in this error.  “While the revenue expenditure, especially non-plan RE exceeded both BE and RE, capital expenditure bore the brunt with a reduced allocation than budgeted,” the report stated.  In 2015-16, for instance, the capital expenditure promised in the budget is Rs 10,066 crore. The achieved figure was Rs '8,342 crore. It was worse in the preceding years. This also means that the money borrowed from the open market is utilised mostly for revenue expenditure and not, as it should be, for capital expenditure.

What is disquieting is the persistence of the variation from 2011-12 to 2015-16. This has rendered the medium-term fiscal policy forecasts less credible. The repercussions are manifold. The quality of fiscal management has taken a nosedive. This is evident from the reduced growth in plan size and reduced capital expenditure.  “This systemic reduction in plan and capital expenditure has adverse growth implications,” the committee said.