After an aggressive expenditure squeeze enforced in the last fiscal, the government intends to encourage ministries to kick-start their budgetary spending from the first quarter of this financial year itself.

The finance ministry has has asked all the ministries and departments to initiate procedures for seeking Cabinet/expenditure finance committee approvals that are needed for the new proposals announced in the 2013-14 Budget. It has asked them to get all the approvals soon, so that the spending could begin from May, much earlier than usual.

The finance ministry has started the current year with a cash balance of R1 lakh crore. It is estimating to spend R80,000 crore out of the cash balance in April. An official said the process for securing Cabinet approval regarding the Pradhan Mantri Sadak Yojana (PMSY) II has just been initiated. It is expected to be approved in April itself.

The move marks a departure from the practice whereby ministries start spending the allocated fund only by the middle of the fiscal, resulting in higher unspent balances and hampering effective and sound spending under the schemes. Since ministries cannot spend more than 33% of the allocated fund in the January-March quarter, and not more than 15% in the month of March, the unspent amount is generally significant, reflecting poor planning by the various departments.

Faced with a lower-than-expected revenue mop-up, finance minister P Chidambaram took aggressive measures to cut down government spending in order to bring down the fiscal deficit from 5.9% of the GDP in FY12 to 5. 2% of GDP in FY13.

He initiated cuts in plan spending of R92,000 crore, almost 18% over the previous fiscal, the steepest cut in recent years. The cut in plan expenditure was somewhat recovered through an increase in allocation to non-plan spending by R32,000 crore, but a closer look at the sub-heads will show that the spending has been reduced by R36,000 crore in non-plan category also.

However, the sharp increase in spending on subsidies such as petroleum, fertilisers and food resulted in higher allocation under non-plan. The total expenditure was estimated at R14.9 lakh crore in the budget estimates for 2012-13. Under which the size of plan expenditure was 5.21 lakh crore while non-plan spending was pegged at R9.69 lakh crore. As per the revised estimates, the total expenditure size came down to R14.3 lakh crore and plan expenditure came down to R4.29 lakh crore.

For the current year, the finance ministry has budgeted the total expenditure size at R16.65 lakh crore and the plan expenditure at R5.55 lakh crore, an increase of 29.4% over the revised estimates of 2012-13. The non-plan spending is pegged at R11.09 lakh crore for the current financial year. For the current fiscal, the fiscal deficit is pegged at 4.8% of the GDP.