Govt notifies terms for Jalan expenditure reform panel

The panel will give interim report before the Budget of 2015-16 and its final report before the Budget of 2016-17

The government on Friday issued the terms of reference for the recently named Expenditure Management Commission, to be chaired by former Reserve Bank chief Bimal Jalan.

It is to review major areas of central government expenditure and institutional arrangements, including the budgeting process and fiscal resposibility rules, “without compromising the commitment to fiscal discipline”. It will suggest measures to improve efficiencies in the existing expenditure classification system, including the focus on capital expenditure.

The panel, to be headquartered in Delhi, will give an interim report before the Budget of 2015-16 and its final report before the Budget of 2016-17.

Prime Minister Narendra Modi had approved the constitution of the Commission on August 13. It was announced by Finance Minister Arun Jaitley in the year's Budget, presented in July.

The subsidy bill on food, petroleum and fertilisers, termed major subsidies, is estimated at Rs 251,397 crore for 2014-15, up 2.5 per cent over the Rs 245,451 crore in the revised estimate for 2013-14.

The panel's chairman is to have the status of a cabinet minister. Former finance secretary Sumit Bose will be a full-time member; former RBI deputy governor Subir Gokarn would be a part-time member. It will also comprise the finance ministry's additional secretary, expenditure, as an ex officio member and a full-time member-secretary.

Many user charges have not been revised for years and sometimes the government is not even able to recover their cost. The finance ministry wants a rise in charges for services related to public works, patents, security, copyright and the post.

The Commission will design a framework to improve operational efficiency of expenditure through focus on utilisation, targets and outcomes. The government has also asked the panel to suggest measures to achieve reduction in financial costs through a better cash management system, greater use of information technology tools for expenditure management, and improved financial reporting systems.

“The commission will devise its own procedures and may appoint such advisors, institutional consultants and experts, as necessary, for any particular purpose,” the finance ministry said.

The Commission can call for information, documents and evidence and ministries and departments of the government would have to furnish that.

“I propose to overhaul the subsidy regime, including food and petroleum subsidies, and make it more targeted, while providing full protection to the marginalised, poor and scheduled castes/tribes,” Jaitley had said in his Budget speech.

The minister stated that meeting the target of reining in the Centre's fiscal deficit at 4.1 per cent of gross domestic product (GDP) in 2014-15 was a daunting challenge but achievable. To do so, the government proposed to bring down major subsidies from 2.2 per cent of GDP in 2013-14 (revised estimate) to 2.03 per cent of GDP in 2014-15 (budget estimate).