Understanding the state budget process

1. Dr. Paramita Majumdar
Independent Consultant
New Delhi
31 January 2018
02/01/18 1
Training Programme on Gender Responsive
Budgeting
29 January – 2 February, 2018
VVGNLI, Noida

2.  A budget is a financial plan and a list of all planned
expenses and revenues. In other terms, a budget is an
organizational plan stated in monetary terms.
 Budgeting incorporates system of using
Budget + Monitoring + Correction system

3. A budget process refers to
the process by which governments
create and approve a budget

4.  Budget preparation is not open to citizens.
 No formal mechanism at the Union and State level that
invites citizens to participate in the budgeting process.
 State budget-making process is a secret bureaucratic
exercise.
 role of civil society organisations is limited due to the
lack of databases and information
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5.  Setting up the fiscal targets and the level of
expenditures compatible with these targets. This is the
objective of preparing the macro-economic framework.
 Formulating expenditure policies.
 Allocating resources in conformity with both policies
and fiscal targets. This is the main objective of the core
processes of budget preparation.
 Addressing operational efficiency and performance issues.

6.  A top-down approach, consisting of: (i) defining
aggregate resources available for public spending; (ii)
establishing sectoral spending limits that fits government
priorities; and (iii) making these spending limits known to
line ministries;
 A bottom-up approach, consisting of formulating and
costing sectoral spending programs within the sectoral
spending limits; and
 Iteration and reconciliation mechanisms, to
produce a constant overall expenditure program.

7. Incremental Budgeting is –
(i) a mechanical set of changes in a detailed line-item budget,
(ii) leads to very poor results.
(iii)The dialogue between the Ministry of Finance and line ministries
is confined to reviewing the different items and to bargaining cuts
or increases, item by item.
(iv)Discussions focus solely on inputs, without any reference to
results, between a Ministry of Finance typically uninformed about
sectoral realities and a sector ministry in a negotiating mode.
(v) Not a good tool for expenditure control as Line-item incremental
budgeting focuses generally on goods and services expenditures,
whereas the budget busters are normally entitlements,
subsidies, hiring or wage policy or expenditure financed with
foreign aid.

8. 1.Emoluments &
allowances of the
Governor and
expenditure relating to
his office;
2.Salaries & allowances
of the Speaker and
Deputy Speaker
3.Debt charges
4.High Court Judges
salary & allowance
5.Other expenditure
declared by the
Constitution or by
State Legislature by
law
1.Emoluments &
allowances of the
Governor and
expenditure relating to
his office;
2.Salaries & allowances
of the Speaker and
Deputy Speaker
3.Debt charges
4.High Court Judges
salary & allowance
5.Other expenditure
declared by the
Constitution or by
State Legislature by
law
Not
Voted
Not
Voted
VotedVoted

9.  Finance Dept obtains B.Es in prescribed formats from
the local budgeting officers under different heads
 Budget Estimates are furnished to the Government
 Budget Estimates are the detailed estimates of receipt and
expenditure included in the Budget and show
(i) Actuals of the past year,
(ii) Budget estimates of the current year,
(iii)Revised estimate of the current year and
(iv) Budget estimates of the ensuing year.

10.  Require prior administrative approval of the Finance
Department
 New proposals for Major and Minor works are submitted
separately by the Administrative Department to the Finance
Department in duplicate generally by September-October
 Proposals for new unavoidable expenditure are reported by
mid November in order of priority with the approval of the
Minister-in-Charge.
 Proposals of new expenditures are finalized by the Council of
Ministers generally held in January.

11.  Each head of department is responsible for enforcing
financial order and strict economy at every step. S/He
is responsible for observance of all relevant financial
rules and regulations both by her/his own office and by
subordinate disbursing officers.
 A controlling officer must see not only that the total
expenditure is kept within the limits of the authorised
appropriation but also that the funds allotted to
spending units are expended in the public
interest and upon objects for which the money was
provided.
In Finance –
Women the
Missing Link

12. The Budget Cycle
Budget
Planning
Budget
Execution
Finance Issues Budget
Instructions
WHEN?
Depts. develop Budget (HOW?
WHAT is required)
Draft Budget submitted to Finance
Formal Review & consideration
Budget
Decision
making
Discussion & Adoption
of Budget
Performance &
Evaluation
Staff, Fund Flow,
Monitoring
HOW is it done?
Audit?
Budget
Process

13. Participation, like accountability, is a
relative, not absolute, concept

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16. Outlays to Outcomes: Results Chain
Fiscal
space

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process product process product process product
policy
formulation
policy
statement
budget
compilation budget
expenditure
on activities outcomes
revenue
collection
Policy appraisal
(Gender appraisal) Audit
(Gender Audit)
Budget appraisal
(Gender budgeting)

18. Budget Call Circular
Gender Budget Statement
Pre-Budget Consultations
Program Guidelines
Monitoring Reports
Staff & Fund Flow
Performance monitoring
Gender Disaggregated data
Using Gender Sensitive
Checklist
Outcome Budget
Performance Audit Parliamentary
Standing Committee
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Budget
Cycle
(ii) Budget Decision making(ii) Budget Decision making
(i) Budget Planning(i) Budget Planning

19. Advised to put in place, if not already there, systems of data collection,
with the help of specialized agencies wherever necessary, for the
purpose of
(i) developing measurable `indices of performance’ to measure and assess
quality of implementation;
(ii) developing norms of standard unit cost of delivery of a service;
(iii)quantification/factoring in of environmental outcomes;
(iv)quantification of community and empowerment outcomes
through social capital formation;
(v) quantification of impact of funds earmarked for publicity/awareness
generation; and
(vi)disaggregation, by sex and other relevant factors, of indicators of
performance and impact.

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Budget Call CircularBudget Call Circular

21.  Call circulars are official notices issued by the Ministry of
Finance towards the beginning of each annual budget cycle.
 Instructs government agencies how they must submit their
demands for budget allocations for the coming year
 Many times several circulars are issued at different points in
the budget cycle.
 Planning and budget officials use the BCC and the formats
therein to draw up their budget submissions. These
submissions are subsequently inspected by, and negotiated
with the MOF /Planning Dept before going to the
Assembly/Cabinet
 BCCs are internal working documents of the government.
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State explicitly that gender should be
reflected in the submissions, and will
be considered an important criterion
during negotiations.
State explicitly that all relevant
indicators be sex-disaggregated, and
that gender-related indicators be
included wherever relevant.
State explicitly that gender should be
reflected in the submissions, and will
be considered an important criterion
during negotiations.
State explicitly that all relevant
indicators be sex-disaggregated, and
that gender-related indicators be
included wherever relevant.

23.  The first budget call circular issued annually specifies the format to be used for
reporting on contributions to poverty reduction and “women’s advancement” as
well as the criteria to be used in scoring the poverty and gender impact of each
expenditure. Gender “shares” for each expenditure are also calculated using the
specially developed RCGP (Recurrent, Capital, Gender and Poverty) database and
model.
 The instructions provided to ministries in the call circular include 14 criteria
for assessing the poverty and gender impact and assigning a percentage. The
standards are:
(a) access to health care and improved nutrition;
(b) access to public properties and services;
(c) access to education and training;
(d) reduced daily working hours of women;
(e) women’s participation in labour market and income-generating activities;
(f) enhanced social safety and reduced probable vulnerability and risk for
women;
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24. (g) women’s empowerment (related to decision-making);
(h) women’s participation in national and international forums;
(i) safety and free movement for women;
(j) monitoring and evaluation;
(k) increased social status of women;
(l) access to law and justice for women;
(m) information technology for women; and
(n) reduced violence and oppression. The guidelines state that the
percentage should be in the following ranges, based on qualitative
assessment of the programme concerned:
 Zero: No likely improvement in women’s advancement
 1-33 per cent: Low level of benefit for women
 34-66 per cent: Medium level of benefit for women
 67-99 per cent: High level of benefit
 100 per cent: Women’s advancement is the specific aim of the project or
programme
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25.  Gender-related requirements apply only to 3 ministries and do not
mandate information on actual allocations be provided,
 2014-15 BCC states that - In formulating the budget proposal,
budgetary agencies are required to ensure that budget proposals are gender
responsive and incorporate ECP [Environment, Climate Change and Poverty]
initiatives.
 BCC 2015-16 - Towards promoting gender equality and women
empowerment, the Royal Government of Bhutan is initiating gender
responsive planning and budgeting in three ministries, i.e. Agriculture and
Forests, Education and Health. These Ministries are required to provide a
narrative policy statement in their proposals with the following information:
a. Ministry’s policies and Key Result Areas (KRAs) stating how they contribute to
gender related goals with examples of physical and financial data if available;
b. priority issues that need to be addressed to promote gender equality;
c. indicate 2-3 relevant interventions/ strategies/ activities.
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26. Engendered Budget Call Circular aligns
budgetary decision-making with policies and
facilitates up scaling of gender mainstreaming
activities
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GBSGBS
Gender Budget Statements (GBS)
- an accountability tool – leading to
improved reporting on targeted
allocations to women and girls

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30.  Sex disaggregated Data is crucial - GRB initiatives have
improved the availability of sex disaggregated data essential for
assessing budgetary impacts
 Capacity Building and advocacy has led to general
awareness across institutions of the need for gender
mainstreaming/budgeting
 Costs and the contributions of women’s unpaid care
labour recognised
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32. Thank you for your attention!
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drpmj2017@gmail.com &
drparo2017@gmail.com