Government looks to end below-the-line accounting of Budget numbers



a group of people standing in front of a building: Budget 2021: Government looks to end below-the-line accounting of Budget numbers


© Megha Mishra
Budget 2021: Government looks to end below-the-line accounting of Budget numbers

Extra-budgetary resources (EBRs) were an integral, if frowned upon, part of budgets. In simpler terms, this refers to allocations made from money outside of revenue or borrowings, through means such as the National Small Savings Fund, and fully serviced bonds like the bank recapitalisation bonds.

While bank recap still stays, the government is expecting to end almost all entries financed through EBRs, shows the Union Budget 2021-22, presented by Finance Minister Nirmala Sitharaman in Parliament on February 1.

The biggest of them being the loans given to Food Corporation of India (FCI) from the National Social Security Fund (NSSF).

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In FY21, the FCI has been given Rs 84,636 crore, compared with budget estimates of Rs 1.37 lakh crore. While the loans given to the FCI from the NSSF have been the lowest since FY19, and for FY22 the budgeted target for such loans is zero. As it is for most departments and public sector undertakings (PSUs) which are provided EBRs in much smaller amounts.

In fact apart from the Rs 20,000 crore in bank recap, and an additional Rs 10,000 crore in fully-serviced bonds to other agencies, the Centre has no other plans for EBRs next year.

That’s a budgeted target of Rs 30,000 crore through EBR financing in FY22, down from Rs 1.26 lakh crore in FY21 and Rs 1.48 lakh crore in FY20.

It’s worth noting that if not for EBR, these amounts would have been added to the fiscal deficit numbers in the given years.

The Finance Ministry has been promising in the past few years that it will end the practice of EBRs and bring every allocation and loan on-the-books. It seems to be finally taking steps in that direction.