Centre kicks off FY28 budget planning, seeks new spending proposals

The codes allow the government to classify and track expenditure under different schemes and budget heads. Ministries need them to incorporate proposed schemes and new spending plans into their Detailed Demands for Grants (DDGs), which specify their expenditure requirements for the coming financial year.

The advance exercise is intended to give ministries time to prepare budget documents and ensure new spending proposals are properly accounted for before allocations are finalized.

Early planning

“New budget codes help the government classify and track spending under different schemes and budget heads. Ministries need them to include proposed schemes and new spending plans in their Detailed Demands for Grants (DDGs), which set out their expenditure requirements for the coming financial year,” said one of the officials cited above.

“The department has asked ministries and departments to submit their requests well in advance to allow sufficient time for examination and allotment of appropriate codes,” said the other official.

The allotment of a new budget code does not, however, amount to approval of a scheme or sanction of funds, the second official clarified.

The account codes are maintained under the Public Financial Management System (PFMS) and shared with the Union Budget Information System (UBIS) to facilitate the preparation of demands for grants.

In response to a Mint query, expenditure secretary V. Vualnam said that it is part of the procedures followed during the budget exercise.

“Early identification of new schemes and spending proposals is important for better fiscal planning. It allows the government to assess funding requirements, prioritise expenditure and align budget allocations with policy objectives. The advance creation of budget codes can also help streamline the preparation of demands for grants and reduce last-minute changes during the budget-making process,” said Dharmveer, assistant professor at the Delhi School of Economics.

The scale of the exercise will depend on the spending priorities ministries put forward. In the FY27 budget, the government announced initiatives spanning manufacturing, agriculture, technology, social welfare and sports. These included Biopharma SHAKTI to strengthen domestic biologics manufacturing, India Semiconductor Mission 2.0, a ₹10,000 crore SME Growth Fund, a container manufacturing scheme and three dedicated chemical parks.

Other announcements included an Integrated Programme for Textiles covering five components; the Mahatma Gandhi Gram Swaraj initiative for khadi, handloom and handicrafts; and agricultural initiatives such as the Coconut Promotion Scheme, programmes for cashew and cocoa cultivation, and Bharat-VISTAAR, an AI-based agricultural advisory system. The government also announced Divyangjan Kaushal Yojana, Divyang Sahara Yojana, SHE Marts for self-help groups, the Khelo India Mission, a ₹20,000 crore carbon capture scheme and a Coastal Cargo Promotion Scheme.

Fiscal priorities

The FY28 preparations come as the Centre balances spending priorities with fiscal consolidation. The FY27 budget pegged total expenditure at ₹53.47 trillion, 7.7% above the revised estimate of ₹49.65 trillion for FY26. Receipts excluding borrowings were estimated at ₹36.52 trillion, while the fiscal deficit target was set at ₹16.96 trillion, or 4.3% of GDP, against 4.4% in FY26.

Capital expenditure was budgeted at ₹12.22 trillion, equivalent to 3.1% of GDP. Effective capital expenditure, including grants to states for creating capital assets, was estimated at ₹17.15 trillion. The government sought to sustain public investment while lowering the Centre’s debt-to-GDP ratio to 55.6% in FY27 from 56.1% in FY26.

The budget-making exercise also follows a revision to the Centre’s borrowing plans for the current financial year. The government has cut its estimated market borrowing for FY27 by nearly ₹1.2 trillion from the budgeted level.

The Centre now plans to raise ₹15.995 trillion through dated government securities in FY27, down from the ₹17.2 trillion estimated in the Union budget. Of the revised amount, ₹7.86 trillion is expected to be raised in the second half of the fiscal year, according to the finance ministry’s borrowing plan released in consultation with the Reserve Bank of India.