The Finance Ministry has initiated the preparatory process for the 2027-28 Union Budget, directing ministries and central government departments to submit realistic expenditure and revenue projections for the upcoming financial year.
According to the Budget Circular 2027-28 issued by the Budget Division of the Department of Economic Affairs on August 27, 2026, pre-Budget meetings chaired by the Secretary (Expenditure) are scheduled to commence on October 12, 2026, and continue through mid-November.
The exercise will cover the Revised Estimates (RE) for 2026-27 and Budget Estimates (BE) for 2027-28. Ministries and departments have been asked to submit the required Budget information by October 6, 2026, while estimates relating to tax receipts are to be furnished by October 15, 2026.
Key Directions for Expenditure Planning
The Finance Ministry has asked departments to first account for committed and continuing expenditure before proposing allocations for new schemes or expenditure items. Projections are expected to take into consideration expenditure incurred up to September 2026, comparable spending during the previous year, pending arrears, unspent balances and anticipated financial requirements.
The Budget exercise also places emphasis on rationalising government schemes. Discontinued programmes are not to be included in the 2026-27 Revised Estimates, while schemes scheduled to end after 2026-27 should not be provided allocations in the 2027-28 Budget.
Spending proposals for new and continuing Central Sector Schemes, Centrally Sponsored Schemes and projects are required to remain within the ceilings prescribed by the Department of Expenditure.
Focus on Avoiding Large Year-End Savings
Departments have also been instructed to improve expenditure management and avoid substantial savings or surrender of funds toward the end of the financial year.
The circular highlights concerns raised by Parliamentary Committees regarding significant savings in grants. Where savings of ₹100 crore or more occur in a grant, the department concerned is required to provide an explanation to the Public Accounts Committee.
Push for Higher Non-Tax Revenue
Revenue mobilisation is another important component of the Budget preparation exercise. Ministries and departments have been asked to furnish details of non-tax revenue, including user charges and outstanding arrears, along with measures being undertaken to improve collections.
The Finance Ministry has asked departments, ministries and autonomous bodies to review their existing user charges with a view to recovering the current cost of delivering services and providing a reasonable return on the capital invested.
Departments have additionally been directed to report measures being taken to recover outstanding non-tax revenue arrears.
Subsidy and Finance Commission Requirements
For subsidy proposals, ministries will need to clearly disclose the assumptions and calculations used to determine their projected requirements.
The Budget process will also take into account the 16th Finance Commission cycle. Existing schemes proposed for continuation during the new Finance Commission period will require appraisal and approval by the competent authority.
Final Expenditure Finance Committee (EFC) memoranda are required to be submitted to the Department of Expenditure before the respective pre-Budget meetings.
The Finance Ministry has initiated the preparatory process for the 2027-28 Union Budget, directing ministries and central government departments to submit realistic expenditure and revenue projections for the upcoming financial year.
According to the Budget Circular 2027-28 issued by the Budget Division of the Department of Economic Affairs on August 27, 2026, pre-Budget meetings chaired by the Secretary (Expenditure) are scheduled to commence on October 12, 2026, and continue through mid-November.
The exercise will cover the Revised Estimates (RE) for 2026-27 and Budget Estimates (BE) for 2027-28. Ministries and departments have been asked to submit the required Budget information by October 6, 2026, while estimates relating to tax receipts are to be furnished by October 15, 2026.
Key Directions for Expenditure Planning
The Finance Ministry has asked departments to first account for committed and continuing expenditure before proposing allocations for new schemes or expenditure items. Projections are expected to take into consideration expenditure incurred up to September 2026, comparable spending during the previous year, pending arrears, unspent balances and anticipated financial requirements.
The Budget exercise also places emphasis on rationalising government schemes. Discontinued programmes are not to be included in the 2026-27 Revised Estimates, while schemes scheduled to end after 2026-27 should not be provided allocations in the 2027-28 Budget.
Spending proposals for new and continuing Central Sector Schemes, Centrally Sponsored Schemes and projects are required to remain within the ceilings prescribed by the Department of Expenditure.
Focus on Avoiding Large Year-End Savings
Departments have also been instructed to improve expenditure management and avoid substantial savings or surrender of funds toward the end of the financial year.
The circular highlights concerns raised by Parliamentary Committees regarding significant savings in grants. Where savings of ₹100 crore or more occur in a grant, the department concerned is required to provide an explanation to the Public Accounts Committee.
Push for Higher Non-Tax Revenue
Revenue mobilisation is another important component of the Budget preparation exercise. Ministries and departments have been asked to furnish details of non-tax revenue, including user charges and outstanding arrears, along with measures being undertaken to improve collections.
The Finance Ministry has asked departments, ministries and autonomous bodies to review their existing user charges with a view to recovering the current cost of delivering services and providing a reasonable return on the capital invested.
Departments have additionally been directed to report measures being taken to recover outstanding non-tax revenue arrears.
Subsidy and Finance Commission Requirements
For subsidy proposals, ministries will need to clearly disclose the assumptions and calculations used to determine their projected requirements.
The Budget process will also take into account the 16th Finance Commission cycle. Existing schemes proposed for continuation during the new Finance Commission period will require appraisal and approval by the competent authority.
Final Expenditure Finance Committee (EFC) memoranda are required to be submitted to the Department of Expenditure before the respective pre-Budget meetings. CASansaar