10 Feb Let’s understand Extra Budgetary Resources and look into some important Data of Budget 2022-23
Let’s understand Extra Budgetary Resources and look into some important Data of Budget 2022-23 – Today Current Affairs
Expenditure : The government has proposed to spend 39.4 lakh crore in the financial year 2022-23, which is an increase of 4.6 % over the revised estimate of previous year 2021-22. The Hindu Analysis.
Receipts : The Receipts (other than borrowings) of the government in 2022-23 are expected to be 22.8 lakh crore, which would be an increase of 4.8 % over revised estimate of 2021-22.
GDP : In the budget of 2022-23, The government has estimated a nominal GDP growth rate of 11.1% for the financial year 2022-23. Nominal GDP growth rate rate is defined as real GDP growth plus inflation.
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Fiscal Deficit : The target of Fiscal deficit in 2022-23 is 6.4 % of GDP, which is lower than the revised estimate of 6.9 % of GDP in 2021-22 Budget ( little higher than the budget estimate of 6.8 % of GDP).
Revenue Deficit : The target of the revenue deficit in 2022-23 is kept as 3.8 % of GDP, which is lower than the revised estimate of 4.7% in 2021-22.
Extra Budgetary Resources : After a number of years the budget has not relied on Extra Budgetary Resources (EBR) for loans from the National Small savings fund.
In the budget 2022-23 the highest percentage increase in allocation among top 13 ministries, is observed in the Ministry of Communication (which is 93%), followed by Ministry of Road Transportation and Highways (which is 52%), Ministry Of Jal Shakti (which is 25%).
What are Extra Budgetary Resources/ Borrowings: The Hindu Analysis
According the budget document, “Extra budgetary resources (EBRs) are those financial liabilities that are raised by Public Sector Undertakings for which repayment of entire principal and interest is done from Government budget,” Such borrowings are made by state-owned firms to fund government schemes but are not part of the official budget calculations.
Extra budget borrowing is excluded from the fiscal deficit calculations, but at the same time, are added to the total debt of the government.
In recent years, several CPSUs have raised resources from the market by issuing Government of India-Fully Serviced Bonds (GoIFSB) for which the repayment of both principal and interest is to be done from the Budget. The Hindu Analysis.
This means that though the borrowing is not a part of the consolidated fund of India, the interest payment for such borrowings are made out of the consolidated fund.
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(Use of the extra budget borrowings : Several budgets announced schemes are financed out of extra budget borrowings. These borrowings are done by the public sector entities that are administering the schemes. In the past, schemes like the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Deen Dayal Upadhayay Gram Jyoti Yojana (DDUGJY), Swachh Bharat Mission (SBM), Pradhan Mantri Awas Yojana (PMAY), etc were financed out of extra budget borrowings.)
The borrowings are made through Government of India fully serviced bonds and NSSF Loans). This means any government entity can take money from the market by issuing Government of India fully serviced bonds or by getting a loan from National Small Savings Funds (Which is called NSSF loans). And then this money will be used in funding the government scheme which comes under that particular government entity.
The government doesn’t show these loans in the budget and that’s why these money will not be added to the fiscal deficit of the budget. But the principal and the interest on these loans will be paid by the government. And thus these repayment of principal and interest will be shown in expenditure of the government. The Hindu Analysis.
In the budget of 2022-23 the government has shown nil spendings in Expenditure Profile against Extra Budgetary Resources. From here it can be concluded that The schemes which were earlier funded by NSSF Loans or Government of India fully serviced Bonds, will now be funded by Budget itself.
Concerns of the CAG: The Comptroller and Auditor General of India earlier had raised concern about rising off budget borrowings. It stated “Government has increasingly resorted to off-budget financing for revenue as well as capital spending. In terms of revenue spending, off-budget financing was used for covering deferring fertilizer arrears/bills through special banking arrangements; food subsidy bills/arrears of FCI through borrowings and for implementation of irrigation scheme (AIBP) through borrowings by NABARD under the Long Term Irrigation Fund (LTIF). In terms of capital expenditure, off budget financing of railway projects through borrowings of the IRFC and financing of power projects through the PFC are outside the budgetary control.”
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Md Layeeque Azam, Economics Faculty