Fiscal prudence through disclosure

This year's Budget has introduced a new statement that is a welcome move towards greater transparency

- RAISINA HILL

A new and significant disclosure made by Finance Minister Nirmala Sitharaman in her Budget for 2024-25, presented on July 23 and approved by Parliament on August 8, has largely gone unnoticed. This disclosure is contained in Statement No 27-A in the expenditure document of the Budget.

Don't confuse it with Statement No 27 in the same document, which lists the schemes and amounts financed through bonds fully serviced by the Union government and through loans from the National Small Savings Fund (NSSF), which have to be repaid by the exchequer. However, prudent fiscal management in the last couple of years has ensured that there has been no recourse to either such bonds or NSSF loans since 2021-22.

But Statement No 27 has still been retained in the expenditure document, reminding one of the fiscal impropriety that had been committed from 2016-17 to 2021-22. Note that both the bonds and NSSF loans are treated as part of government debt under the rules governing the Fiscal Responsibility and Budget Management (FRBM) Act. In other words, seeking recourse to them concealed the actual extent of the government's fiscal deficit.

Worse, no mention of these bonds or loans was made in the Budget documents till March 2019.

Statement No 27 made its debut in the expenditure document of the Budget for 2019-20, raising awareness about the lack of transparency in such matters. In the next two years, the finance ministry made conscious efforts to reduce the extent of recourse to such bonds and loans and, indeed, ended this practice from 2022-23.