The circular scheduled pre-budget discussions with the various ministries and departments starting from October 16 till the first week of November, under the special circumstances of the pandemic.
“In the special circumstances of this year, the basis of the final budgetary allocations will be first and foremost overall fiscal position, and subject to that the absorptive capacity of the Ministry/Department,” the circular said.
The expenditure secretary will conduct the pre-budget discussions with the secretaries and financial advisers of ministries and departments.
“Ceilings for all categories of expenditure, including Central Sector and Centrally Sponsored schemes will be discussed. Accordingly, the RE 2020-21 and BE 2021-22 for all categories of expenditure, and select schemes/projects, may be indicated separately for Revenue and Capital expenditure,” it said.
The final ceiling for the schemes will be announced separately by the finance ministry by January 15.
Thorough review of schemes and projects
Before this, the government proposed a thorough review of all existing schemes and projects to de-duplicate and weed out overlapping or redundant schemes.
Once this has been completed for the current budgetary preparations, such an exercise should be repeated every five years through specific terms of reference to either the NITI Aayog or the Finance Commission (FC), the circular said.
“The effort should be to ensure that all wasteful, unnecessary and poorly run programmes are subject to review and overhaul or even elimination,” it added.
The recommendations of the 15th FC, which is expected to submit its final report by end of this month, will also be factored into the FY22 budget.
All estimates made in February under the Union Budget for FY21 have been upended by the impact of the pandemic.
The finance ministry said in a statement in Parliament last month that it was unable to submit the medium term expenditure framework with rolling targets of indicative expenditure for FY22 and FY23, as mandated under the Fiscal Responsibility and Budget Management Act, because it could not obtain reliable projections of GDP growth under the prevailing circumstances.