I read the Times of India analysis with a mixture of alarm and weary recognition: in the first nine months of the fiscal year, the Centre and state jointly released just over 41% of budgeted funds across 53 flagship schemes — and revised estimates for many of those schemes have been sharply cut Govt spent barely 40% of Budget on biggest schemes in 9 months.
Why this matters to me
I have long argued that budgets must be about outcomes, not theatrical numbers on paper. When large allocations — Jal Jeevan Mission, PMKSY, PM Schools for Rising India, MGNREGA and others — see tiny fractions actually released or spent, the problem is not just fiscal prudence: it is lost opportunity. The slippage shows up as:
- delayed infrastructure and services for citizens;
- frustrated implementing agencies and states that cannot plan; and
- the risk that nominally large budgets become mere headlines, not deliverables.
This is a theme I returned to previously when I welcomed the idea of attaching outcome targets to budgets. See my earlier piece on why outcome-oriented budgeting matters An Unprecedented Budget Reform. That argument — to move from outlays to measurable outcomes — feels more urgent now than ever.
Reading the numbers (what the reports highlight)
- The 53 schemes analysed had combined BEs of a little over Rs 5 lakh crore; REs have been pared to under Rs 3.8 lakh crore (about 74% of BE).
- Actual releases in April–December were just over Rs 2 lakh crore — only ~41% of BE and 55% of RE.
- Several schemes saw REs less than 40% of BE; in a few, actual releases were below 10%.
- Some schemes (like MGNREGA and certain scholarship missions) overshot BE, but they are the exception.
These are not mere accounting quirks. They reflect the friction between allocation, absorption capacity, inter-governmental coordination and, at times, re-prioritisation mid-year.
Causes — a pragmatic reading
From my experience and earlier writing, the causes fall into a few recurring buckets:
- Absorption constraints: states and implementing agencies sometimes lack the staff, systems or project readiness to absorb big disbursements quickly.
- Conditional and shared financing: many schemes are co-funded by states; delays or reluctance at either end slow releases.
- Over-optimistic budgeting: setting aspirational BEs without credible execution plans sets up a gap.
- Administrative delays and procedural bottlenecks: approvals, tendering, audits and inter-departmental clearances slow on-the-ground work.
- Mid-year re-prioritisation: fiscal managers may cut REs when early spending is muted, creating a self-fulfilling underspend.
None of these are insoluble; they demand better design and accountability.
What I would insist upon — practical prescriptions
I write as someone who believes budgets should be living documents that insist on delivery. Here are practical moves I keep returning to:
- Make outcome-linked allocations real: attach clear, measurable targets to major headlines and publish mid-year progress publicly.
- Real-time fund tracking: a unified dashboard (Centre + state) showing releases, utilizations, pending approvals and reasons for delay.
- Conditional but progressive releases: tranche funding tied to verified milestones rather than calendar dates.
- Strengthen capacity at the last mile: investing in implementation teams, project management units and digital workflows in states.
- Citizen audits and transparency: publish project-level dashboards, payment trails and verification checklists so citizens can hold implementers to account.
- Pilot alternate financing: for truly transformational projects, explore participatory public investment instruments so the public is a stakeholder in outcomes as well as inputs.
Many of these ideas echo what I urged earlier: convert outlays into outcomes and insist on independent, verifiable measures of delivery An Unprecedented Budget Reform.
The risk of complacency — and the upside of reform
If we accept perennial underspend as normal, two things happen: the credibility of programs erodes, and political debate reduces to defending numbers rather than asking what was delivered. Conversely, if we treat these shortfalls as a design and execution problem, not an accounting curiosity, we can repurpose savings into higher-impact interventions, improve targeting, and accelerate the projects that actually matter to citizens.
I remain hopeful because solutions are technical and administrative rather than metaphysical. Better design, sharper accountability and modest investments in capacity can convert the 40% into meaningful, measurable progress.
Regards,
Hemen Parekh
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