Acommission headed by former Reserve Bank governor Bimal Jalan will suggest the Centre should not carry over pending expenditure to subsequent years to make the fisc look healthier.
The expenditure management commission is studying schemes, programmes, acquisitions and projects where the government spends money and will suggest ways to reduce administrative and implementation costs in its interim report to the Finance Minister Arun Jaitley after the winter session of Parliament.
"The brief is not to look at where the taxpayer's money is being spent, but how efficiently it is spent," said a senior official aware of the commission's deliberations. "The panel is looking at how the sum allocated can be spent in the most cost-effective way," he added.
The commission is focusing on the delivery mechanism of programmes, the technology used and accounting methods. It is not only looking at welfare schemes and defence acquisitions, but also how salaries and pensions are disbursed and how the government acquires everything from office space to stationary. It is examining whether the government's accounting system needs to be changed.
The government follows cash accounting, where income is counted when cash (or a cheque) is received, and expenses when actually paid. The alternative is accrual accounting, where transactions are counted when they happen regardless of when the money is received or paid.
According to a finance ministry official, a big administrative system like India follows cash accounting because the accrual method is too complicated. Smaller economies like New Zealand follow accrual accounting. "The commission is examining if the government can adapt a system that brings together best practices from both methods," the first official quoted above said. He added deliberations on this were in preliminary stages.
The commission was announced by Jaitley in his maiden budget speech on July 10. "Time has come to review the allocative and operational efficiencies of government expenditure to achieve maximum output," the finance minister had said. The panel was constituted on September 4. Other members include former finance secretary Sumit Bose and former RBI deputy governor Subir Gokarn.