Reduction in outlay for centrally sponsored schemes by about Rs 91,000 crore in the revised estimate for FY25 was due to large unspent balances with states, expenditure secretary Manoj Govil told Prasanta Sahu. Edited excerpts.

Why the budget size was reduced in the revised estimate for FY25?

The revised budget estimate for expenditure is around Rs 1.05 lakh crore less than the FY25 budget estimate of Rs 48.2 lakh crore. Revenue expenditure is almost accurate. A difference (shortfall in spending) of Rs 93,000 crore is coming from the capital expenditure side. The Capex target was a little bit high, and ambitious, from Rs 9.49 lakh crore in FY24 to Rs 11.11 crore for FY25. The progress in capex in the first quarter was lower due to elections and other issues.

What is the reason behind the reduction of Rs 91,000 crore in FY25 outlay under centrally sponsored schemes?

Through the Public Financial Management System (PFMS), we have a good idea as to how much money is pending in each Single Nodal Agency (SNA) account. What we have found out is that in many state governments, in many schemes, large amounts of money are available in their SNA accounts. If a large amount of money is available, then one would first ask the state governments to spend that money, or at least spend 75% of it, before the next instalment is released. So based on the progress of expenditure, also some rationalization has been done.

Will there be conditions attached to capex loans to states next year?

As against the target of Rs 1.5 lakh crore capex loans for FY24, we had done Rs 1.09 lakh in 12 months. This year, against a similar target, we have done approximately Rs 1.08 lakh crore in the first ten months. We have two months more. So, we are making an estimate that another 15,000 crores can be utilized by the state governments under this scheme to reach the revised estimate of Rs 1.25 lakh crore this year. It may also be higher than Rs 1.25 lakh crore also. The allocation is Rs 1.5 lakh crore for the scheme in FY26. Like in previous years, there will also be some conditionalities, or project-linked capex loans next year.

Subsidy outlays for the next fiscal are flat. Do you expect market prices of fertilisers and economic costs of PSD food grains to remain lower?

We do not really have a good idea as to how the international petroleum and fertilizer prices will behave. So, some broad estimation is made. The actual spend for FY24 on food, fertilizer, petroleum and certain other subsidies were around Rs 4.35 lakh crore, whereas the revised estimate for FY25 is Rs 4.28 lakh crore. Of course, depending on the trend of prices, especially the fertilizer or the raw material for fertilizer, as well as for petroleum, there could be some changes, either in the plus direction or in the minus direction from the budget estimate for subsidies (Rs 4.26 lakh crore) for next year.

MGNREGA outlay is unchanged at Rs 86,000 crore for next year vis-a-vis this year. Will it be enough to meet work demands?

The NREGA is a demand-based scheme. Over the last five-six years, we have seen a variety of allocations being made. It was Rs 60,000 crore for a year and over Rs 1 lakh crore for another year also. So, right now, we have provided what we think is the demand-based likely scenario.

When will the 8th Pay Commission be constituted?

The government had announced the pay commission would be set up just a few days back. We have written to the state governments and major ministries for their input on the terms of reference for the Commission. Once, it is firmed up, a proposal will be presented to the Union Cabinet. So, it may be set up in the next couple of months.