COVID-19 impact: Huge revisions to Budget 2020-2021 estimates likely, say govt officials

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government is likely to make major changes to FY21 Budget estimates due to the impact of COVID -2019, sources told CNBCTV18.

For this, a full review of the budget is likely after the end of the first quarter.

Many government officials said the first quarter will be a “write-off” and hence the government may wait out this period out before a full fledged review of the Budget.

Sources said there could be “huge revisions” to the numbers set out in the Budget estimates announced on Feb 1. There is a strong likelihood of higher revenue expenditure due to the relief measures to be announced for COVID-19 affected sectors, they said.

To create funds for this , the government may cut capital expenditure and readjust the capex allocations for revenue expenditure. In any case, demand for capex is likely to be muted and the government may instead reprioritise money under these heads for spend on health, agriculture, greater cash transfers as some of the likely priorities. The Budget had allocated around Rs 4 trillion towards capital expenditure in FY21 and a large part of this could be used for relief measures, officials explain.

For revisions , reappropriations to the Budget , the Finance ministry will need Parliamentary approval and this could be possible in the Monsoon Session.

Some officials even say , the review exercise on the budget numbers may start immediately and expenditure may actually see a cut to match resources. With the first quarter expected to be a write off, advance tax collections and divestment receipts are likely to be tepid. In addition, some of the deadlines could be extended as well.  Including capital expenditure, the government has budgeted for Rs 30.42 trillion as expenditure in FY21.

The government has so far not signalled a higher borrowing plan for the current financial year.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow