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| Finance ministry concerned over rising expenditure bill |
| BS Reporter / New Delhi Jan 26, 2010, 00:58 IST |
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The finance ministry today called for a strict action against those ministries that have shown “indifferent attitude” in adhering to the government’s rules for controlling their expenditure. It has particularly pointed towards the ministries of defence, railways, mines and corporate affairs, as well as the Department of Economic Affairs for excess expenditure.
In a report by the Public Accounts Committee, the finance ministry has expressed “grave concern” and called for a stringent financial discipline to be monitored by secretaries in the concerned ministries and departments.
“It has also been recommended that action should also be taken to deal sternly with cases where any slackness is noticed in observance of prescribed financial rules,” Expenditure Secretary Sushma Nath said in an office memorandum meant for all secretaries and asked them to ensure that the phenomena of excess expenditure was not repeated.
| TAXING DIFFERENCES |
| PROPOSALS OF EMPOWERED GROUP |
| * A threshold of Rs10 lakh for states and Rs 1.5 crore for the Centre to protect small traders |
| * VAT, entertainment tax, luxury tax, tax on lottery, state cess, surcharge and entry tax to be subsumed in GST |
| * Some states said they earn good revenue from purchase tax and it should not be subsumed under GST |
| * Alcoholic beverages may be kept out of the purview of GST and sales tax/VAT continued to be levied on it |
| * Petroleum products should be kept outside GST as is the prevailing practice and sales tax continued to be levied |
| COMMENTS OF UNION GOVERNMENT |
| * A uniform threshold of Rs 10 lakh or more for both the Centre and the states to avoid distortions |
| * Electricity duty, Octroi, purchase tax and taxes levied by local bodies should also be subsumed under GST |
| * Keeping purchase tax outside GST will give states a loophole to impose the tax on any commodity |
| * These should be brought under GST to remove the cascading effect on GST paid on inputs |
| * These may be levied to GST and in select cases credit of GST paid on these items may be disallowed |
This comes in the wake of a recent austerity drive by the government, which has become significant with the operation of the Fiscal Responsibility and Budget Management Act, 2003. Nath also urged for all the heads of departments in central government ministries to oversee the expenditure against sanctioned grants.
The committee has also asked the finance ministry to look into “rigid enforcement of prescribed financial rules and procedure so as to contain the instances of excess expenditure to the bare minimum.”
Earlier this month, Nath had issued another such memorandum in which it asked ministries to engage independent evaluators and assessment agencies to scrutinise and evaluate achievements against physical outputs and final outcomes of major flagship schemes.
Currently, the main objective of the finance ministry is tightening expenditure in an effort to return to the path of fiscal correction. Finance Minister Pranab Mukherjee has set a target of bringing down the fiscal deficit to 5.5 per cent of the gross domestic product in 2010-11, and further to 4 per cent in 2011-12, from 6.8 per cent estimated for the current financial year.
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