Noida and Mumbai: In 2020-21, the union government had estimated a budget of Rs 30.4 lakh crore on February 1, 2020. But when it declared the revised budget on February 1, 2021, the amount was 13.4% larger, at Rs 34.5 lakh crore, budget documents show.

Some ministries, such as health and rural development, were allocated more money in the revision, while others, such as home affairs and social justice and empowerment received less.

When you look at the new budget documents that will be published this February, look out for these three numbers: the budget estimates or BE, which will tell you what the government plans or had planned to allocate to each ministry, the revised estimates or RE, which will tell you how much the budget was revised from the BE, and third, the actual amount spent, or expenditure, which will be available only until 2020-21, as actual expenditure is published after two years.

Some variation between BE, RE and actuals is inevitable given that the expenditures are projections made at the start of the year. However, if there are vast differences and revisions, it reduces the credibility of the numbers, according to Jayati Ghosh, an economist at the University of Massachusetts in Amherst, US, and a former professor of economics at the Jawaharlal Nehru University in New Delhi.

Revisions to the budget numbers also affect the implementation of government schemes. For instance, officials in charge of programmes might cut back on expenses or, beneficiaries might receive a lower benefit or fewer might receive a benefit, if the budget is revised downwards, Protiva Kundu, an economist at the New Delhi-based think-tank Centre for Budget and Governance Accountability, told IndiaSpend.

Our explainer on what the three different terms for a ministry's budget mean and their impact on the ground.

BE, RE and actuals

Every year, the finance ministry estimates the revenues and expenditures for the following year. Revenues are projected based on the estimated tax collection and income from the sale of assets (such as from public sector companies). Based on the revenue, the budget for different sectors, such as health, education and police, is determined.

Expenditures can exceed revenue, and the difference between expenditure and revenue is called the revenue deficit, which can be met through borrowing from the Reserve Bank of India, provident funds or external agencies like the World Bank. As on March 31, 2021, India owed Rs 121.2 lakh crore.

The finance ministry allocates an amount to each ministry, scheme and department for the next financial year. This is the budget estimate (BE). On February 1 this year, the budget presented will have estimates for the next fiscal year, that is, 2022-23.

The BE can be changed if the funds are insufficient or exceed the needs of the ministry or scheme. The department/ministry has to ask for a supplementary grant in November if they need more, based on which the finance ministry allocates more money.

This amount is called the revised estimate (RE). The RE numbers presented are for the current year. Therefore, this budget will have the RE of 2021-22.

BE represents the "intention to spend" of the government and are not legally binding, explained Kundu.

Actual expenditure, as the name suggests, is the amount actually spent by the ministry/department/scheme. Since this is derived after auditing receipts, they are available only after the money has been spent. This year, the actual expenditures in the budget documents will be from 2020-21.

Actual expenditure was 3.5% less than the BE for 2019-20, the latest year for which all three numbers are currently available, show budget documents. The RE was 3.1% lower than BE, data show.

There is no check on underspending by a ministry or department, according to Ghosh.

For instance, malnutrition continues to be a chronic problem in India, even as the funds meant for the POSHAN Abhiyaan were unutilised in 2020-21, observed the Parliamentary Standing Committee on Education, Women, Children and Youth Affairs.

Agriculture, labour, women and child ministries used less than the RE

The Ministry of Parliamentary Affairs had used only 67% of the amount allocated to it in the RE, the Ministry of New and Renewable Energy used 74%, while the Ministry of Commerce and Industry had used 88%, according to the provisional figures for the year 2020-21 on the website of the Controller General of Accounts (CGA).

The Ministry of Women and Child Development used only 92% of all funds allocated to it at a time when India's stunting and wasting rates are among the highest in the world, as we reported in 2021. The Integrated Child Development Services, the government's flagship programme for health, education and nutrition of young children under the age of six years, falls under this ministry.

Insufficient funds affect implementation of key schemes

Since the allocations for the following year are made before the current year is up, the ministry of finance, which prepares the budget, has to go by a combination of actual expenditure for the first half of the year and a projection of expenditure for the rest of the year, which is the RE. A suitable increment is added to it to arrive at the BE for the following year.

If the RE for a ministry is less than the BE, there is a probability that it will be allocated less funds in the following year because it is expected that the ministry will have a positive opening balance (money left over from the previous year's BE), according to Kundu.

There are also schemes, such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), which guarantees 100 days of paid work to every household, which use most of the funds allocated to them within the first six months of a year and get more money allocated in the RE.

"For MGNREGA, the government assumes that each household will get 40-45 days of work instead of the promised 100 days and allocates accordingly," explained Ghosh.

Meanwhile, funds for nutrition schemes are not increasing at the same pace as inflation.

The lower-than-required allocations are made each year even though there is no evidence that the number of beneficiaries is decreasing for several schemes, said Kundu. Overall, "the kitty is shrinking while the demand for services and infrastructure is increasing".

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