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The Expenditure Management Commission headed by former Reserve Bank of India Governor Bimal Jalan has, in its final report, suggested a slew of measures to streamline government spending and plug the leakage of subsidies by expanding the scope of the direct benefit transfer scheme.
Indications are that some of the suggestions may find their way into Budget 2016-17, the more so since Finance Minister Arun Jaitley has time and again underlined the need for efficient and productive spending.
“Some of this is already underway, but the Commission has stressed that this is essential to cut leakages and trim wasteful expenditure,” said a senior government official. The Commission has now called for using Direct Benefit Transfers for scholarships, pensions and subsidies as well.
The issue was also dealt with in the Commission’s interim report to the Finance Ministry in January last year.
A reduction in subsidies through better targeting will also lower revenue spending and free up more fiscal space for development work, the official said, pointing out that this was a key term of reference of the Commission.
Announced as part of the Union Budget 2014-15, the Commission was set up in September 2014. The Finance Ministry is, however, unlikely to make its report public at present.
“The final report was submitted earlier this month. It is a two-volume report and its recommendations are under examination. While work has begun on implementing some of them, a few may be taken up at the time of the Budget,” said the official.
For instance, its recommendations to streamline expenditure and review grants made to autonomous bodies, and link at least a part of it to performance are already being examined by the Finance Ministry, said the official.
Additionally, the Commission is understood to have called for a comprehensive review of the Centre’s expenditure pattern, including annual allocations to ministries and their unspent funds.
Its recommendations are significant given that the Finance Ministry seems keen to follow the fiscal consolidation roadmap while ensuring adequate expenditure as a stimulus for the economy in 2016-17.
Fiscal deficit targetThe Centre plans to lower the fiscal deficit to 3.5 per cent of GDP in 2016-17 from 3.9 per cent this fiscal, according to the Medium Term Fiscal Policy Statement.
Apart from Jalan, former RBI Deputy Governor Subir Gokarn and former Finance Secretary Sumit Bose are members of the Commission.
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