Jalan panel submits report on cutting expenses, fund distribution

The expenditure management commission, headed by former Reserve Bank of India (RBI) governor Bimal Jalan, on Saturday submitted its first interim report to Finance Minister Arun Jaitley. While the finer details of the report will not be known till Jaitley and his team of policymakers examine it and make it public, the broad proposals suggest ways for the government to reduce administrative costs and disburse funds for various schemes more efficiently.

A senior government official said the commission might submit a few more interim reports to the government, before presenting a final report early next year.

The panel, which includes former RBI deputy governor Subir Gokarn and former finance secretary Sumit Bose, is studying various government schemes, programmes, acquisitions and projects for which the Centre is spending substantially.

The commission is said to have suggested the Centre shouldn't carry forward pending expenditure from a particular year to subsequent ones to show better expenditure or fiscal deficit numbers. Sources say the panel isn't looking at the pros and cons of various programme or criticising the budgetary allocations towards particular schemes.

Rather, it is recommending ways in which the sum allocated can be spent in the most cost-effective manner.

The three broad areas the commission has examined are the delivery mechanism of programmes, the technology being used to implement these, and the accounting methods used by the government.

The government follows the cash-based accounting system, through which income is counted when cash (or a check) is actually received, and expenses are counted when actually paid. An alternative method is an accrual-based system, wherein transactions are counted as they happen, regardless of when the money is actually received or paid.

Officials said the commission has studied the pros and cons of both methods. Their recommendations in this regard, however, couldn't be ascertained.

Jaitley had announced the formation of the commission in his maiden Budget speech, on July 10 last year. "The time has come to review the allocative and operational efficiencies of government expenditure to achieve maximum output," he had said.

The terms of reference of the commission, constituted on September 4 last year, include reviewing all matters related to central government spending, including suggesting space for increased developmental spending and reviewing the budgeting process and norms under the Fiscal Responsibility and Budget Management Act and suggesting ways to meet a reasonable proportion of spending on services through user charges.

It is also to recommend ways to achieve a reduction in financial costs through better cash management, greater use of information technology and improved financial reporting systems.

THE WAY FORWARD

• Broad proposals suggest ways for the govt to cut administrative costs
   
• Panel has suggested ways to spend budgetary allocation effectively
   
• Delivery mechanisms, technology, accounting methods being studied
   
• Finer details will not be known till FM and team make it public