Could the days of ministries not having a clue about how money allocated for projects is being spent be over soon? A framework for concurrent monitoring of expenditure, developed by the finance ministry in association with NITI Aayog, will be released shortly, expenditure secretary Ajay Narayan Jha said in a Facebook Live interaction to Firstpost. This framework, which has got the concurrence of the ministries, will allow each ministry to monitor the progress of sundry schemes and projects under its jurisdiction.
This will be a significant step in expenditure management, if done properly; right now there is no such concurrent monitoring. There is some monitoring of large infrastructure projects, but that happens with a lag. Since 2016-17, there has been an outcome budget that is part of the budget documents. This lists annual targets that ministries have to achieve for the money they have sought. But while this gives a sense of how much money has been spent in the first six months and on what – and helps decide budget allocations for the following year, there is no ongoing evaluation process. Another shortcoming in the outcome budget is that the second in the series (released this year) does not let those outside the government know whether the targets listed last year have been met or not.
The news that the fiscal deficit will be the operational target for fiscal consolidation (junking the revenue defict) has upset public finance experts and raised concerns about laxity over checking consumption expenditure. Jha feels this will not happen. There are already checks in place, he says. One example is that the annual increase in salaries, pensions and establishment expenses is capped at 6-8 percent. Besides, he points out, autonomous bodies funded by the government now have to meet 30 percent of incremental expenditure through internal resources.
Nor should there be concerns about inadequate capital expenditure by the centre, Jha says. The Rs 3 lakh crore direct allocation from the central budget will be leveraged by ministries to raise almost double the amount.
What could be good news is the likely expansion of direct benefit transfer in the form of shifting in-kind transfers to cash transfers. While cash transfers in food has not moved beyond the three pilot projects in Chandigarh, Puducherry and Dadra and Nagar Haveli, Jha says cash transfers in fertilisers, which started in a few states in October, could be adopted in a large number of states by April. The experiments with cash transfers in kerosene mainly in Jharkhand are also showing good results.
Could the subsidy bill of Rs 2.64 lakh crore (on food, fertiliser and petroleum) shoot up later in the year, given the likely increases in minimum support prices and global crude prices? Jha says the allocation has kept enough elbow room for these eventualities and he does not expect any major change in these numbers.
But yes, the subsidy bill does not include the unpaid amounts to various agencies like the Food Corporation of India (FCI) and on the fertiliser subsidy account. Jha calls it a structural problem that have to do with bills being submitted with a lag and the need for verification, among other things. He sees this petering out once there is greater shift to cash transfers. “This is a systemic challenge we need to address. It will help us have a better budget, more predictable flow of funds and our fiscal numbers will have more credibility.”
Well, so long as the government is at least acknowledging that this is a problem, that is a big step forward. If this, the concurrent monitoring and the greater shift to DBT and cash transfers are pushed through, government spending could become more efficient and not just a bottomless black hole swallowing up taxpayers’ money.
(The writer is a senior journalist and author and tweets at @soorpanakha )
Published Date: Feb 19, 2018 19:21 PM | Updated Date: Feb 19, 2018 19:24 PM