Jalan panel to suggest ways to cut subsidies,hike user charges

The panel will submit its interim report before the Budget for 2015-16, and final report before the Budget for 2016-17

The Expenditure Management Commission, headed by Bimal Jalan, has been entrusted with the task of suggesting ways to improve fiscal discipline, target subsidies more efficiently and imposition of user charges on utilities.

The Commission, whose members are former finance secretary Sumit Bose and former RBI deputy governor Subir Gokarn, will submit its interim report before the Budget for 2015-16, and final report before the Budget for 2016-17.

As per the terms of reference that have been announced, the Commission will review the major areas of central government expenditure and suggest ways to create fiscal space required to meet developmental expenditure needs.

It has also been entrusted with designing a framework to improve "operational efficiency of expenditures through focus on utilisation, targets and outcomes".

That apart, the Commission has been asked to suggest an effective strategy for meeting reasonable proportion of expenditure on services through user charges.

It has also been asked to suggest measures to improve allocative efficiencies in the existing expenditure classification system.

The notification suggested that the ministries and government departments would furnish information to the Commission as may be required by it.

"The Government of India trusts the state governments and other concerned will extend to the Commission full cooperation and assistance," the notification added.

The terms of reference of the Commission states that as the chairman of the panel, former RBI Governor Jalan would enjoy the status of a Cabinet Minister.

Additional Secretary, Expenditure Department (Ministry of Finance) will be an ex-officio member and a senior officer with finance/expenditure experience will be member-secretary of the Commission.

Finance Minister Arun Jaitley in his Budget speech had announced setting of the Commission that will look into various aspects of expenditure reforms to be undertaken by the government.

The panel has been set up as there is a need to review the allocative and operational efficiencies of the government expenditure to achieve maximum output.

Jaitley in the Budget speech had said: "I also 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 SC/STs."

The subsidy bill on food, petroleum and fertilisers is estimated at Rs 2,51,397.25 crore for 2014-15, up 2.47 per cent, over the previous fiscal. It was Rs 2,45,451.50 crore in the revised estimates for 2013-14.