In the recently concluded Congress plenary, Congress President Sonia Gandhi suggested state financing of elections as a measure against corruption in the electoral process. State funding of elections has been suggested in the past in response to the high cost of elections. A few government reports have looked at state funding of elections in the past, including:
Here is what they had to say: The Indrajit Gupta Committee (1998) endorsed state funding of elections, seeing “full justification constitutional, legal as well as on ground of public interest” in order to establish a fair playing field for parties with less money. The Committee recommended two limitations to state funding. Firstly, that state funds should be given only to national and state parties allotted a symbol and not to independent candidates. Secondly, that in the short-term state funding should only be given in kind, in the form of certain facilities to the recognised political parties and their candidates. The Committee noted that at the time of the report the economic situation of the country only suited partial and not full state funding of elections. The 1999 Law Commission of India report concluded that total state funding of elections is “desirable” so long as political parties are prohibited from taking funds from other sources. The Commission concurred with the Indrajit Gupta Committee that only partial state funding was possible given the economic conditions of the country at that time. Additionally, it strongly recommended that the appropriate regulatory framework be put in place with regard to political parties (provisions ensuring internal democracy, internal structures and maintenance of accounts, their auditing and submission to Election Commission) before state funding of elections is attempted. “Ethics in Governance”, a report of the Second Administrative Reforms Commission (2008) also recommended partial state funding of elections for the purpose of reducing “illegitimate and unnecessary funding” of elections expenses. The National Commission to Review the Working of the Constitution, 2001, did not endorse state funding of elections but concurred with the 1999 Law Commission report that the appropriate framework for regulation of political parties would need to be implemented before state funding is considered.
The Finance Minister, Ms. Nirmala Sitharaman, presented the Union Budget for the financial year 2019-20 in Parliament on July 5, 2019. In the 2019-20 budget, the government presented the estimates of its expenditure and receipts for the year 2019-20. The budget also gave an account of how much money the government raised or spent in 2017-18. In addition, the budget also presented the revised estimates made by the government for the year 2018-19 in comparison to the estimates it had given to Parliament in the previous year’s budget.
What are revised estimates?
Some of the estimates made by the government might change during the course of the year. For instance, once the year gets underway, some ministries may need more funds than what was actually allocated to them in the budget, or the receipts expected from certain sources might change. Such deviations from the budget estimates get reflected in the figures released by the government at later stages as part of the subsequent budgets. Once the year ends, the actual numbers are audited by the Comptroller and Auditor General of India (CAG), post which they are presented to Parliament with the upcoming budget, i.e. two years after the estimates are made.
For instance, estimates for the year 2018-19 were presented as part of the 2018-19 budget in February 2018. In the 2019-20 interim budget presented in February 2019 (10 months after the financial year 2018-19 got underway), the government revised these estimates based on the actual receipts and expenditure accounted so far during the year and incorporated estimates for the remaining two months.
The actual receipts and expenditure accounts of the central government are maintained by the Controller General of Accounts (CGA), Ministry of Finance on a monthly basis. In addition to the monthly accounts, the CGA also publishes the provisional unaudited figures for the financial year by the end of the month of May. Once these provisional figures are audited by the CAG, they are presented as actuals in next year’s budget. The CGA reported the figures for 2018-19 on May 31, 2019.[1] The Economic Survey 2018-19 presented on July 4, 2019 uses these figures.[2]
The budget presented on July 5 replicates the revised estimates reported as part of the interim budget (February 1, 2019). Thus, it did not take into account the updated figures for the year 2018-19 from the CGA.
Table 1 gives a comparison of the 2018-19 revised estimates presented by the central government in the budget with the provisional unaudited figures maintained by the CGA for the year 2018-19.[3]
Table 1: Budget at a Glance: Comparison of 2018-19 revised estimates with CGA figures (unaudited) (Rs crore)
|
Actuals |
Budgeted |
Revised |
Provisional |
Difference |
|
|
Revenue Expenditure |
18,78,833 |
21,41,772 |
21,40,612 |
20,08,463 |
-1,32,149 |
|
Capital Expenditure |
2,63,140 |
3,00,441 |
3,16,623 |
3,02,959 |
-13,664 |
|
Total Expenditure |
21,41,973 |
24,42,213 |
24,57,235 |
23,11,422 |
-1,45,813 |
|
Revenue Receipts |
14,35,233 |
17,25,738 |
17,29,682 |
15,63,170 |
-1,66,512 |
|
Capital Receipts |
1,15,678 |
92,199 |
93,155 |
1,02,885 |
9,730 |
|
of which: |
|
|
|
|
|
|
Recoveries of Loans |
15,633 |
12,199 |
13,155 |
17,840 |
4,685 |
|
Other receipts (including disinvestments) |
1,00,045 |
80,000 |
80,000 |
85,045 |
5,045 |
|
Total Receipts (without borrowings) |
15,50,911 |
18,17,937 |
18,22,837 |
16,66,055 |
-1,56,782 |
|
Revenue Deficit |
4,43,600 |
4,16,034 |
4,10,930 |
4,45,293 |
34,363 |
|
% of GDP |
2.6 |
2.2 |
2.2 |
2.4 |
|
|
Fiscal Deficit |
5,91,062 |
6,24,276 |
6,34,398 |
6,45,367 |
10,969 |
|
% of GDP |
3.5 |
3.3 |
3.4 |
3.4 |
|
|
Primary Deficit |
62,110 |
48,481 |
46,828 |
62,692 |
15,864 |
|
% of GDP |
0.4 |
0.3 |
0.2 |
0.3 |
|
Sources: Budget at a Glance, Union Budget 2019-20; Controller General of Accounts, Ministry of Finance; PRS.
The 2018-19 provisional figures for revenue receipts is Rs 15,63,170 crore, which is Rs 1,66,512 crore less than the revised estimates. This is largely due to Rs 1,67,455 crore shortfall in centre’s net tax revenue between the revised estimates and the provisional estimates (Table 2).
Major taxes which see a shortfall between the gross tax revenue presented in the revised estimates vis-à-vis the provisional figures are income tax (Rs 67,346 crore) and GST (Rs 59,930 crore). Non-tax revenue and disinvestment receipts as per the provisional figures are higher than the revised estimates.
Table 2: Break up of central government receipts: Comparison of 2018-19 RE with CGA figures (unaudited) (Rs crore)
|
|
Actuals |
Budgeted |
Revised |
Provisional |
Difference |
|
Gross Tax Revenue |
19,19,009 |
22,71,242 |
22,48,175 |
20,80,203 |
-1,67,972 |
|
of which: |
|
|
|
|
|
|
Corporation Tax |
5,71,202 |
6,21,000 |
6,71,000 |
6,63,572 |
-7,428 |
|
Taxes on Income |
4,30,772 |
5,29,000 |
5,29,000 |
4,61,654 |
-67,346 |
|
Goods and Services Tax |
4,42,562 |
7,43,900 |
6,43,900 |
5,83,970 |
-59,930 |
|
Customs |
1,29,030 |
1,12,500 |
1,30,038 |
1,17,930 |
-12,108 |
|
Union Excise Duties |
2,59,431 |
2,59,600 |
2,59,612 |
2,30,998 |
-28,614 |
|
A. Centre's Net Tax Revenue |
12,42,488 |
14,80,649 |
14,84,406 |
13,16,951 |
-1,67,455 |
|
B. Non Tax Revenue |
1,92,745 |
2,45,089 |
2,45,276 |
2,46,219 |
943 |
|
of which: |
|
|
|
|
|
|
Interest Receipts |
13,574 |
15,162 |
12,047 |
12,815 |
768 |
|
Dividend and Profits |
91,361 |
1,07,312 |
1,19,264 |
1,13,424 |
-5,840 |
|
Other Non-Tax Revenue |
87,810 |
1,22,615 |
1,13,965 |
1,19,980 |
6,015 |
|
C. Capital Receipts (without borrowings) |
1,15,678 |
92,199 |
93,155 |
1,02,885 |
9,730 |
|
of which: |
|
|
|
|
|
|
Disinvestment |
1,00,045 |
80,000 |
80,000 |
85,045 |
5,045 |
|
Receipts (without borrowings) (A+B+C) |
15,50,911 |
18,17,937 |
18,22,837 |
16,66,055 |
-1,56,782 |
|
Borrowings |
5,91,062 |
6,24,276 |
6,34,398 |
6,45,367 |
10,969 |
|
Total Receipts (including borrowings) |
21,41,973 |
24,42,213 |
24,57,235 |
23,11,422 |
-1,45,813 |
Note: Centre’s net tax revenue is gross tax revenue less share of states in central taxes. Figures for GST include receipts from the GST compensation cess. Note that GST was levied for a nine-month period during the year 2017-18, starting July 2017.
Sources: Receipts Budget, Union Budget 2019-20; Controller General of Accounts, Ministry of Finance; PRS.
While the provisional figures show a considerable decrease in receipts (Rs 1,56,782 crore) as compared to the revised estimates, fiscal deficit has not shown a comparable increase. Fiscal deficit is estimated to be Rs 10,969 crore higher than the revised estimates as per the provisional accounts.
On the expenditure side, the total expenditure as per the provisional figures show a decrease of Rs 1,45,813 crore as compared to the revised estimates. Certain Ministries and expenditure items have seen a decrease in expenditure as compared to the revised estimates made by the government. As per the provisional accounts, the expenditure of the Ministry of Agriculture and Farmers’ Welfare and the Ministry of Consumer Affairs, Food and Public Distribution are Rs 22,133 crore and Rs 70,712 crore lower than the revised estimates, respectively. The decrease in the Ministries’ expenditure as a percentage of the revised estimates are 29% and 39%, respectively. The food subsidy according to CGA was Rs 1,01,904 crore, which was Rs 69,394 crore lower than the revised estimates for the year 2018-19 given in the budget documents.
[1] “Accounts of the Union Government of India (Provisional/Unaudited) for the Financial Year 2018-19”, Press Information Bureau, Ministry of Finance, May 31, 2019.
[2] Fiscal Developments, Economic Survey 2018-19, https://www.indiabudget.gov.in/economicsurvey/doc/vol2chapter/echap02_vol2.pdf.
[3] Controller General of Accounts, Ministry of Finance, March 2018-19, http://www.cga.nic.in/MonthlyReport/Published/3/2018-2019.aspx.
