Finmin tells ministries to work within budget

NEW DELHI: For expenditure secretary Sushma Nath, charity begins at home. The bureaucrat from the finance ministry has directed all ministries to ensure that their businesses are completed within the budget for the fiscal year ending March 2010, although it could have made a significant difference if the ministry had been stern at the time of announcing the budget. It was mainly directed at the department of economic affairs, ministries of defence, railways, company affairs and mines.

There is no evidence yet these ministries have overshot the budget. "It is now advised that necessary steps may be taken by government secretaries, being the chief accounting authorities , to ensure rigid enforcement of general financial rules and to see that no instance of excess expenditure takes place in future for reasons which can be anticipated and taken care of in advance either in budget estimates or supplementary grants, except in rare or exceptional circumstance," a memo signed by Nath said. Non-compliance would be dealt with ’sternly’ , it said, without explaining.

Finance minister Pranab Mukherjee is battling to rein in the 16-year high fiscal deficit of 6.8% of the gross domestic product as he prepares ground for return to fiscal discipline next year. The government in the budget to be presented next month is likely to cut allocations of various ministries and roll back some tax cuts announced last year to overcome the negative impact of the global financial meltdown.

"Given the huge deficit, the guidelines can be quite effective but should have been announced at the start of the fiscal. Then the ministry could have taken some action against any leakages. The spending should also be linked to outcomes and monitored regularly," said DK Srivastava, director, Madras School of Economics.

The government had in December 2009 taken Parliamentary approval to spend additional Rs 30,942.62 crore, but had said it will meet this extra expenditure from savings elsewhere and not borrow more.