In a significant move to overhaul the country’s public expenditure classification framework, the Comptroller and Auditor General (CAG) has issued a directive harmonising the Object Heads of Expenditure across the Union and all State governments, aimed at uniformity to budgeting and accounting systems nationwide.
The common and standardised list of Object Heads addresses decades-long inconsistencies in how States classify disaggregated expenditure.
These variations had long impeded inter-state and inter-temporal comparisons and complicated alignment with Union Government accounts.
What do the directives suggest?
Under the directive, all States must adopt the harmonised Object Heads by FY 2027-28, a step expected to bring long-awaited clarity and comparability to budgeting.
“The wide variation among States in the operation of expenditure heads at the disaggregate level had been engaging the attention of multiple stakeholders and was impacting inter-temporal and inter-state comparison as well as those with the Union government,” said Jayant Sinha, Deputy CAG.
What did Sinha say?
Sinha also highlighted progress on advancing the finalisation of Monthly Civil Accounts, a reform aimed at strengthening fiscal transparency and enabling swifter decision-making.
Through coordinated efforts with state governments and the Reserve Bank of India, the date for rendering Monthly Civil Accounts has been advanced from the 25th of the following month to the 10th in about ten States and the 15th in another eight. This acceleration ensures that State Governments, the RBI, MoSPI and other stakeholders have timely fiscal information, thereby bolstering fiscal discipline.