Shamima Siddiqui*
Public
Expenditure in the Government is managed as per the Appropriation Act which is
passed by the Parliament every year. Based on the estimates of expenditure as
presented in the Annual Financial Statement, Demands for Grants are presented
for the approval of the Parliament. Thereafter, Ministries/Departments seek the
approval of Parliament on their respective Detailed Demands for Grants (DDG)
that gives service wise estimates of expenditure. During the financial year,
expenditures are incurred in accordance with the estimates approved in the
DDGs.
For the formulation of these estimates to be
presented in the Budget, extensive consultations are held with the respective
departments/ministries in meetings chaired by Secretary (Expenditure) in which
the Internal Financial Units of the respective ministry/department, headed by
the Financial Advisers and the functional heads in the ministries/departments
participate.
The Central Government has embarked upon a
fiscal consolidation programme to bring down its fiscal deficit over a period
of time. With the reduction of the fiscal deficit, it is expected that the debt
stock of Government would stabilize within acceptable limits. This would
further reduce the interest payments that Government has to incur every year,
thereby freeing more resources for development spending.
The expenditure of Central
Government comprises of certain committed items like salaries, pension,
interest payments, Defence etc. One of the important
aspects of the salary and pension expenditure of the Government is the impact
of revision in the salary structure of employees and the arrears arising out of
implementation of Pay Commissions’ recommendations. This usually happens once
in ten years when Pay Commission recommendations are implemented with retrospective
effect. This aspect was also analysed by 13th
Finance Commission (FC) which recommended that awards of Pay Commissions should
be made to commence from the date on which the recommendations of future Pay
Commissions are accepted by the Government. The 13th FC has further
stated that since Finance Commissions are able to present their
inter-governmental recommendations without any need for retrospective fiscal
transactions, the same should be possible in the case of Pay Commissions as
well.
The three major subsidies provided by Central
Government are Food, Fertilizer and Petroleum Subsidies. Over the years, the
subsidy bill of Government has been increasing rapidly and its share in the
total expenditure of the Government has become a matter of concern. At present,
the subsidy paid by the Government is routed through the provider of the goods
and services that are subsidized. For better targeting of subsidy, the Central
Government is moving towards a system in which the subsidy amount is directly given
to the intended beneficiary.
To implement a solution to the above and to
evolve a model of direct transfer of subsidies on Kerosene, LPG and
Fertilizers, by re-engineering existing systems, processes and procedures in
the implementation process, designing appropriate IT systems and aligning these
with the issuance of UID numbers, and bringing about changes in the
administration and supply chain management, the Government has constituted a
Task Force under the Chairmanship of Shri. Nandan Nilekani, Chairman, Unique Identification Authority of
India (UIDAI).
Government has also constituted a High Level
Expert Committee (HLEC) to suggest measures for efficient management of public
expenditure under the Chairmanship of Dr. C. Rangarajan.
The HLEC has made recommendations on fundamental aspects of public finance that
are under consideration.
The Budget of Central Government is a
statement of fiscal allocations and has no disclosures on the corresponding
outcomes achieved. The disclosure on outcome had been attempted through
separate exercises that report on the outcome achievements separately. Outcome
Budget was started in Government consequent to the announcement of the Finance
Minister in the budget speech for 2005-06. Detailed guidelines for the Outcome Budget
presented by every Ministry in respect of every demand, except those explicitly
exempted from doing so, for plan as well as non plan expenditure, are issued by
Department of Expenditure every year.
The Performance Monitoring and Evaluation
System (PMES) is a system of performing management and reporting which was
started from the year 2009-10. Under PMES, each department is required to
prepare a Results-Framework Document (RFD). RFD provides a summary of the most
important results that a department/ministry expects to achieve during the
financial year. This document has two main purposes: (i)
move the focus of the department from process-orientation to
results-orientation, and (ii) provide an objective and fair basis to evaluate
department’s overall performance at the end of the year. These measures have
increased the transparency in reporting of performance on outcomes.
For
improving quality of expenditure on schemes, it is very important to ensure
that there is robust performance evaluation and reporting mechanism that is
tightly linked with the budgeting process and financial decision making. In
long term, this would ensure that scarce public resources are optimally
utilized for those activities that provide maximum benefit with least cost. The
Plan expenditure of the Government can be divided into Central Plan and
Assistance to State Plans. Central Plan consists of Central Plan Schemes and Centrally Sponsored
Schemes (CSS) that are implemented by States. There is a need to rationalize
schemes within a Ministry and across Ministries. Rationalisation
of both plan and non plan schemes would require dropping of schemes which have
out lived their utility, while taking up new schemes.
Regular Monitoring and Evaluation of schemes
and incorporating changes required to address issues observed during evaluation
is extremely essential to ensure that the quality of expenditure is maintained.
There are various initiatives taken at Central Government level that have this
objective. Programme Evaluation Organisation of the
Planning commission regularly evaluates the programmes of Government. It has
various Regional and Programme Evaluation Office in the country. Towards this
objective, Cabinet, in November 2010 has approved setting up of an Independent
Evaluation Office attached to the Planning Commission. The Comptroller and
Auditor General of India also conducts performance audit of the activities of
the Government, which analyses the aspects of economy, efficiency and
effectiveness of Government activities.
Monitoring and evaluation also includes
monitoring the trend and pace of expenditure on schemes. The Central Plan
Scheme Monitoring System (CPSMS), which provides real time information on the
status of plan schemes of the Government, is an important initiative in this
regard. There is a need to strengthen this system to provide more information
on expenditure and utilization under plan schemes.
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*Director
(M&C), PIB, with inputs from the Ministry of Finance
SS-196/SF-196/21-12-2011
RTS/HSN