CMS to improve quality of expenditure

As a major shift in the existing public expenditure management system in the state, the Orissa government has introduced Cash Management System (CMS) through monthly expenditure plan (MEP) and quarterly expenditure allocation (QEA) during 2010-11.

This measure is expected to address the problem of rush of expenditure in the last month of a fiscal, thereby improving the quality of expenditure incurred by the departments.

Sources said, the CMS would be on the line of modified exchequer control based expenditure management, which puts restrictions on expenditure during the last quarter of a fiscal. The system has been successfully implemented at the Centre.

The second Administrative Reforms Commission (ARC), taking note of the skewed expenditure pattern of the state governments, observed that the MEP model of the Union ministries should be adopted by the state governments.

CMS seeks to ensure even pacing of expenditure in a fiscal, reduction of expenditure rush in the last quarter, front loading of expenditure in the first three quarters, curbing the tendency of parking the funds outside the government account etc.

Besides, the system would ensure effective monitoring of the expenditure pattern and improve the quality of expenditure.

Sources said, for each demand of grant, the MEP for state plan, Central plan and Centrally Sponsored Plan (CSP) and non-plan would be worked out and furnished to the finance department in the prescribed format.

MEPs would form the basis of quarterly expenditure allocation and the administrative departments shouldn’t exceed this limit without prior approval of the finance department. The finance department has laid down detail guidelines for finalising MEPs. According to it, MEP for March shouldn’t exceed 15 percent of the budgeted provision, except in case of non-plan maintenance expenditure of works, rural development, housing and urban development, water resources and panchayatiraj departments.

Similarly, MEPs for January to March should be so fixed that the QEA for the last quarter shouldn’t exceed 40 percent of the budgeted provision. However, this would not be applicable for non-plan maintenance expenditure for works, rural development, housing and urban development, water resources and panchayatiraj departments. The limit for these departments has been fixed at 50 percent.

On the issue of fund release, the finance department has stated that funds can be sanctioned or released in anticipation of receipt of the Central assistance for on-going schemes during the first three quarters of a fiscal. In case of the Externally Added Projects (EAPs) in the pipeline, expenditure should be incurred only if agreement with the donor agency has been signed and the date of effect of the agreement has been notified.