Centre kicks off FY28 budget planning, seeks new spending proposals

The Centre has begun preparing the Union budget for FY28. It has asked ministries and departments to identify new schemes and spending proposals early. They must also apply for the budget codes required to include those proposals in their expenditure plans.

The Department of Expenditure activated the 2027-28 financial year tab on the CGA’s e-Lekha system. Ministries can use it to submit online applications for new codes. These codes are needed before proposed schemes can be included in Detailed Demands for Grants, or DDGs.

The exercise gives ministries more time to prepare budget documents and allows officials to examine requests and allot suitable codes. It does not approve schemes or sanction money. Instead, it supports better fiscal planning and helps reduce last-minute changes before allocations are finalized.

A budget code is an account code used to classify government expenditure. It links spending to a particular scheme or budget head. This gives the government a structured way to record, monitor and track how money is proposed to be spent.

For example, if a ministry proposes a new programme, it can request a separate code through the e-Lekha system. Once allotted, the code helps place that programme’s expected expenditure in the ministry’s Detailed Demands for Grants. The demands set out the ministry’s requirements for the coming financial year.

The codes are maintained under the Public Financial Management System, or PFMS. They are also shared with the Union Budget Information System, or UBIS. Together, these systems support the preparation of demands for grants and make budget accounting more orderly.

These four parts form a connected budget-making chain. A ministry first identifies a new scheme or spending proposal and requests a budget code. The code provides the classification needed to record that proposal under an appropriate scheme or budget head.

The code is then used in the ministry’s Detailed Demands for Grants. DDGs specify the ministry’s expenditure requirements for the coming financial year. The account codes are maintained under the Public Financial Management System, which supports financial management and accounting. They are shared with UBIS for budget preparation.

This process helps officials organize proposed spending before allocations are finalized. The Department of Expenditure examines requests and allots suitable codes. However, the code only enables classification and inclusion in budget documents. It does not itself approve the scheme or release funds.

Receiving a new budget code does not mean the government has approved the proposed scheme. It also does not mean that funds have been sanctioned. The code only gives the proposal an appropriate place in the government’s expenditure classification system.

For instance, a ministry seeking to include a new programme in its spending plan may apply for a code. If the Department of Expenditure allots one, the ministry can use it in its Detailed Demands for Grants. The code helps identify and track the programme’s proposed expenditure under a suitable budget head.

Approval and funding decisions remain separate steps in the budget process. The article’s officials explicitly clarified this distinction. Early coding allows budget documents to be prepared properly and gives officials time to examine proposals, but final allocations are still subject to the wider budget exercise.

The government’s FY27 spending plan totals ₹53.47 trillion. That is 7.7% higher than the ₹49.65 trillion revised estimate for FY26. Receipts excluding borrowings were estimated at ₹36.52 trillion, leaving a fiscal deficit target of ₹16.96 trillion, or 4.3% of GDP.

For borrowing, the Centre now plans to raise ₹15.995 trillion through dated government securities during FY27. This is almost ₹1.2 trillion below the ₹17.2 trillion market-borrowing estimate announced in the Union budget. The revised plan was released by the finance ministry after consultation with the Reserve Bank of India.

Of the revised borrowing amount, ₹7.86 trillion is expected to be raised in the second half of FY27. The figures show a large spending programme alongside an effort to manage borrowing and reduce the fiscal deficit relative to GDP.

Identifying schemes early gives the government time to understand funding requirements before the budget is finalized. Officials can compare proposals, prioritize expenditure and check whether new commitments fit broader policy objectives. This matters when the Centre is trying to support growth while pursuing fiscal consolidation.

The FY27 budget illustrates the range of possible demands. It included Biopharma SHAKTI, India Semiconductor Mission 2.0, an SME Growth Fund, agricultural programmes, social initiatives and a carbon capture scheme. Early coding helps each proposal enter the expenditure system clearly, so its requirements can be assessed in the DDGs.

The process can also protect public investment from rushed decisions. FY27 capital expenditure was budgeted at ₹12.22 trillion, while the fiscal deficit target was 4.3% of GDP. Better preparation may reduce last-minute changes and help align allocations with available resources, debt goals and policy priorities.

A fiscal deficit measures how much the government’s expenditure exceeds its receipts, excluding money raised through borrowing. The gap indicates the funding requirement for that year. In the FY27 budget, expenditure was ₹53.47 trillion and receipts excluding borrowings were ₹36.52 trillion, producing a targeted deficit of ₹16.96 trillion.

The government meets such a gap partly through borrowing. For FY27, it planned to raise ₹15.995 trillion through dated government securities. Borrowing adds to the government’s outstanding debt, although the article does not say that every part of the deficit is financed through this one borrowing channel.

Debt-to-GDP compares accumulated government debt with the economy’s annual output. It helps show the debt burden relative to economic capacity. The Centre aimed to lower its debt-to-GDP ratio from 56.1% in FY26 to 55.6% in FY27 while maintaining public investment.