Odisha to go for lean Supplementary Budget on bloating expenses

Climbing expenses on implementing the recommendations of the Seventh Pay panel along with resource limitations has forced Odisha to opt for an ‘adjustment budget’ in this fiscal instead of its usual Supplementary expenditure provision.

From October 1 last year, the state government has been paying salaries and pension to its staff in revised scale, keeping to the provisions of the Seventh Pay Commission. The hefty payout has straitjacketed the state's finances as revenue collection has not widened. Since implementation, the state government has paid off 40 per cent arrears in salaries while clearing the pension backlog completely. Consequently, the expenditure on account of salary and pension has shot up.

What’s more, the limit of fiscal deficit of 3.5 per cent of the GSDP (Gross State Domestic Product) has been fully utilised for financing the deficit. Hence, the state is constrained to make substantive provisions under any unit in the absence of adequate resource back up.

“Supplementary Statement of Expenditure, 2018-19 is proposed to be purely an adjustment budget in which the administrative departments would be allowed to augment the provision in one unit only by locating equivalent savings in some other unit of expenditure”, Tuhin K Pandey, principal secretary, finance (Odisha) observed in a letter to all department secretaries.

Historically, the state administrative departments have been making Supplementary provisions shorn of care or caution, resulting in recurring surrender of funds. The total amount surrendered has even gone past the Supplementary provision in some years, drawing the ire of the office of the Comptroller & Auditor General of India.

“Supplementary proposal should not be prepared in a routine manner; but should receive the personal attention of the concerned estimating and controlling officer so that the proposals are based on actual need and should commensurate with their actual spending capacity”, Pandey said.

Earlier, the state government has put in place a Cash Management System which mandates the administrative departments to spend at least 60 per cent of the budgeted funds by December end. The system contains the spending in the last quarter of any fiscal to 40 per cent.

The latest guidelines from the state finance department with respect to Supplementary provision have come with a rider. Those departments with expenditure below 20 per cent of the budget outlay (as on June 30) are not eligible for availing the additional funds.