The Ministry of Finance launched the budget development process for fiscal year 22 by issuing the budget circular and scheduling pre-budget meetings with ministries and departments beginning October 16. This will be the third budget of the finance minister Nirmala Sitharaman and the eighth of the government of Narendra Modi.
Pre-budget meetings with secretaries and financial advisers from government departments and ministries will continue until the first week of November, when they will be asked to submit a revised tentative estimate for fiscal year 21 and the funding requirements for existing plans and new for fiscal year 22.
“Maximum limits for all expense categories will be discussed, including Central Sector and Centrally Sponsored schemes. Accordingly, RE 2019-20 and BE 2020-21 for all expenditure categories, and specifically selected schemes / projects included in MTEF Statements (medium-term expenditure framework), may be indicated separately for Income and Expenditure capital, “the budget circular said.
In a statement filed in Parliament last month, the Ministry of Finance said that it cannot file an MTEF with moving indicative spending targets for fiscal year 22 and fiscal year 23 as provided in the FRBM (Fiscal Responsibility and Management) Act. of the Budget) because it is not possible to obtain reliable projections of GDP growth at this time due to the continuing impact of the covid-19 pandemic on the Indian economy.
The fiscal year 22 budget will also take into account the recommendations of the 15th Finance Committee, which is expected to present its second and final report later this month. “The Finance Ministry will decide separately the final caps for the schemes no later than January 15, 2020, taking into account the government’s resource assessment and available fiscal space,” the Finance Ministry said.
India’s economy contracted to a record 23.9% in the June quarter of fiscal year 21, underscoring the extent of the economic damage inflicted by the pandemic. Most economists now expect Asia’s third-largest economy to contract in double digits in fiscal 21. However, the Ministry of Finance expects a strong GDP rebound in fiscal 22 with nominal GDP growth 19%.
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