RE, BE, Actuals

RE, BE, Actuals

Subject :Economy

Context:

The Revised Estimate will be made public along with the Budget Estimate (BE) for Fiscal Year 2023-24 (FY24).

Details:

• Normally RE for a fiscal year is finalised on the basis of expenditure made in the first six months of that year, while BE for next fiscal year is prepared on the basis of expenditure made in the first nine months of the current year.
  • First indication of RE is reflected in the first set of Supplementary Demands for Grants
• Data released by the Controller General of Accounts (CGA) has shown that the Centre has spent nearly 12.15 per cent more during the first six months (April-September) period of FY23, than the corresponding period of FY22 and 46.2 percent of the total allocation.
• The trends in expenditure during the first six months indicate that there will not be any major cut in the budget allocation and indicates savings with the ‘just-in-time’ release of funds mechanism. 
  • This ensures money goes to various institutions only when they are ready to spend and after achieving certain milestones and not automatically transferred to their account.

Concept:

Office of Controller General of Accounts

• The Comptroller and Auditor General’s (Duties, Powers, and Conditions of Service) Act of 1971 established the need for accounting and audit to be separated.
  • Section 10 of the Act gave the President the authority, after consulting with the CAG, to relieve the Comptroller and Auditor General of the responsibility of compiling the accounts of any Union Government department.
  • In June 1975, the Government of India approved a scheme for accounting and audit separation.
  • The President issued an ordinance, which was followed by the passage of an Act amending the Comptroller and Auditor General’s (DPC) Act 1971, relieving him of the responsibility of compiling accounts for Ministries/Departments of the Government of India.
• The Controller General of Accounts (CGA) in the Ministry of Finance leads the organization and is in charge of the administration of the Management Accounting System.
• Through an integrated government-wide financial information system, the goal is to provide reliable information that promotes transparency in the use and reporting of public funds.
• The Office of the CGA prepares monthly and annual analyses of the Union Government’s expenditure, revenues, borrowings, and various fiscal indicators.
• The mandate of the Controller General of Accounts is derived from Article 150 of the Constitution.
• The duties and responsibilities of CGA are outlined in this statutory mandate, which is incorporated in the Allocation of Business Rules 1961.
  • General principles of Government accounting relating to Union or State Governments and accounting forms, as well as the development or revision of rules and manuals relating to them.
  • Reconciliation of the Union Government’s cash balance with the Reserve Bank in general, and, in particular, Reserve Deposits pertaining to Civil Ministries or Departments.
  • Supervising the maintenance of adequate accounting standards by Central Civil Accounts Offices.
  • Consolidation of monthly accounts, preparation of review of trends in revenue realisation and significant features of expenditure, and preparation of annual accounts (including summary, Civil Appropriation Accounts) showing under the respective heads,the annual receipts and disbursements for the Union Government.
  • Administration of Central Treasuries Rules and Central Government Account (Receipt and Payment Rules 1983).
  • Coordination and assistance in the implementation of management accounting systems in Civil Ministries or Departments.
  • Cadre management of Group ‘A’ (Indian Civil Accounts Service) and Group ‘B’ Officers of the Central Civil Accounts Offices.
  • Matters pertaining to Central Civil Accounts staff belonging to Groups ‘C’ and ‘D’; I Pension disbursement through Public Sector Banks (PSBs) in respect of Central Civil Pensioners, Freedom Fighter, High Court Judges, Ex-MPs and Ex-Presidents.

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.
• On February 1 this year, the budget presented will have estimates for the next fiscal year, that is, 2022-23.
  • The finance ministry allocates an amount to each ministry, scheme and department for the next financial year. This is the budget estimate (BE). 
    • BE represents the “intention to spend” of the government and are not legally binding
  • 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.
    • Revised estimates or RE, which will tell how much the budget was revised from the BE.
  • 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 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 and affects the implementation of government schemes.