The Hindu Business Line : `Cash management' system pays dividends for Govt

THE Finance Ministry's move to introduce a system of `cash management', on a pilot basis, to control expenditures by individual Ministries has seemingly paid dividends.

According to the Ministry's Quarterly Statement on the Economy and Budget for October-December 2003 released today, the actual expenditure up to the third quarter of 2003-04 did not exceed the projected requirements in respect of any of the nine Ministries/Departments selected for cash management.

The overall actual expenditure of Rs 58,045 crore by these Ministries/Departments was only 83 per cent of their projected cash requirement of Rs 69,524 crore.

Under cash management, the Finance Ministry release budgetary allocations in a time-sliced manner, with monthly or quarterly cash limits based on the actual requirements of the Ministries/Departments being prescribed. This is, as against the existing system, where cash is made available to the Ministries/Departments concerned up to the budget ceiling as soon as the Parliament passed the Appropriation Bill. In his 2003-04 Union Budget speech, the Finance Minister, Mr Jaswant Singh, had said that cash management would help avoid "rush of expenditure and the associated possible waste of resources in the last quarter".

The latest Quarterly Statement has noted that actual expenditure in respect of five Departments (Fertilisers, Food and Public Distribution, Health, Elementary Education and Rural Development), the actual expenditure during April-December 2003 ranged from 80 per cent to 89 per cent of their projected requirement, while being 90 per cent in the case of the Department of Family Welfare.

The actual expenditure to projected requirement ratio was even lower at 49 per cent for the Department of Agriculture and 66 per cent for the Department of Women and Child Development.

The nine selected Ministries and Departments, along with interest payments and transfers to State Government and Union Territories, account for nearly 59 per cent of the Centre's total expenditure.