Budget 2019: Govt’s extra-budgetary spending to decline by 12% this year

Union Budget 2019: The government has said that it will progressively reduce its extra-budgetary expenditure.

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Budget 2019-20: What is the big picture that emerges from the conglomerate of specific revenue and expenditure proposals?

Union Budget 2019: A big part of the Union government spending comes from outside the budget which is referred as extra-budgetary resources. In her maiden budget, finance minister Nirmala Sitharaman has estimated that the government’s spending through extra-budgetary means will be Rs 5.38 lakh crore in FY 2019-20. Extra-budgetary resources are expenditure incurred by central PSUs that are given separately in the expenditure budget. In the last three years, capital expenditure of the Union government was range bound at around Rs 3 lakh crore a year. However, extra-budgetary resources mobilised by the central government through central PSUs were almost double the budgeted capital expenditure.

Increasing expenditure outside the budget was criticised by the economists as it was seen as a way to mask the low capital expenditure of the Union government. The Union government’s capital expenditure in three years remained in the range of 10-11% of its total budgeted expenditure.

In her first budget, finance minister Nirmala Sitharaman has pegged the total extra-budgetary spending of public sector undertakings to be Rs 5.38 lakh crore this year, a decline of 12% in comparison with extra-budgetary spending during the previous year.

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“This decline in extra-budgetary expenditure is good,” said NR Bhanumurty, professor of economics at National Institute of Public Finance and Policy (NIPFP).

In the last two fiscals, the Union government has spent little over Rs 6 lakh crore on capital expenditure that is considered crucial for achieving higher economic growth. However, during the same period, the capital expenditure of central PSUs has been over Rs 12 lakh crore.

In an interview to the Financial Express after the presentation of the Union budget, finance secretary Subhash Chandra Garg said the government would progressively bring down its extra-budgetary spending.

In 2017-18, the extra-budgetary spending of the Union government was Rs 6.11 lakh crore. While presenting the last year’s budget, then finance minister Arun Jaitley had estimated that extra-budgetary expenditure will decline by 22% to Rs 4.77 lakh crore. However, in the interim budget presented by Piyush Goyal, this number went up by 28% of the budget estimate to Rs 6.13 lakh crore.

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First published on: 09-07-2019 at 19:14 IST