It’s been close to 3 months since the Finance Minister Smt. Nirmala Sitaraman presented the Union Budget 2019-20 in the parliament. And, some of us are still waiting to have a look at the provisional actuals expenditure for the FY 2018-19. To understand what this fun fact entails, it is important to learn the meaning of provisional actuals.
When the FM presents the Union Budget through the Budget Speech and inform the citizens of the amount of expenditure that it plans to do for various schemes/motives, it is known as budget estimates.
After some months, taking various factors into consideration, the govt. revises its expenditure estimates for the given FY and the subsequent estimates released by the govt. are known as revised estimates.
After the end of the FY, when all the expenditures have taken place allowing the statisticians to estimate the actual expenditure done by the govt., new estimates are released on the actual expenditure taken up by the government, that are known as provisional actuals/actual estimates.
What is Missing?
For the FY 18-19, the govt. has yet not released the actual estimates (for each and every scheme) yet. As can be seen from the figure, the Economic Survey and the Budget only has actuals (17-18), BE (18-19), RE (18-19) and BE (19-20), therefore, missing out on actuals (18-19).
According to Prof. Jayati Ghosh, the actuals (total, and not segregated according to the ministry), can be accessed in the statistical appendix of the Budget that is hard for the general public to understand. The last column provides the ‘provisional actuals’. These figures can be considered to be trustworthy since it comes from the office of the Comptroller General of Accounts. And the fact of the matter is that very few people actually bother to access these figures, which paint a much different picture, if not much more accurate.
According to the professor, most of the numbers stated as the RE for 2018-’19, do not keep in check with the figures presented in the Economic Survey. The biggest discrepancies include the difference of 13.5% in lower tax revenues, 13.4% in lower levels of central government spending, which essentially means the shrinking of the budget by 1% of GDP. According to the provisional actual figures of receipts and spending, the fiscal deficit was greater than stated in the revised estimate by Rs 10,963 crore, so that it amounted to 3.45% of GDP rather than 3.3%as was claimed.
Why does this matter?
According to Prof. Ghosh, there is a huge discrepancy between the RE and AE (in the appendix) which clearly means that the govt. is not spending as much as it’s saying it has been. And the concerning factor here is not the presence of the discrepancy which are an unavoidable part of most estimates but rather the size of the discrepancy, according to the professor.
And since the budget was presented in the Parliament in terms of RE and not AE, this can come off as misleading the government with presentation of a far more rosy pictures than what the AE would suggest. It would take a very diligent MP to cross check the figures in the appendix and question the authenticity of the data. This comes off as misleading the public and it’s elected officials. It can also cause the budgets at local level and state level to be misled as well into taking these incorrect figures into account.
These number also calls into question the future numbers and their validity. Prominent economists like Aravind Subramanian and Raghuram Rajan as well as international economic organisations like the IMF have expressed their concern over the authenticity of the numbers and the reasons given for choosing them over more reliable ones. The government should realise the validity behind these concerns and at the very least, address them.