Search the Internet          Tips  Sites: Finance, Investment

New expenditure management strategy announced

Finance Minister Yashwant Sinha on Wednesday announced a new expenditure management strategy to bring about structural changes in the composition of central government expenditure under which user charges for services provided by government and its agencies will be revised in view of their increased costs.

Presenting the 2001-02 Budget in the Lok Sabha, Sinha said as about three per cent of staff retire every year, this would reduce the manpower by two per cent per annum, achieving a reduction of ten per cent in five years as announced by the prime minister.

Standard Licence Fee (rent) on government accomodation will be enhanced by 50 per cent for Group A, 25 per cent Group B and 15 per cent for other categories of staff with effect from April one, 2001.

Use of Information Technology in government activities with large public interface will be maximised to promote efficiency, he said.

The Expenditure Reforms Commission, which was set up last year, has presented reports concerning downsizing six ministries and departments. These include Department of Economic Affairs, Information and Broadcasting Ministry, Coal Ministry, Department of Heavy Industry, Department of Public Enterprises and Ministry of Small Scale Industry.

To lead by example based on the recommendations of the Expenditure Reforms Commission, Sinha proposed to abolish three Secretary/Special Secretary level and two Joint Secretary level posts in the Department of Economic Affairs.

Sinha said the Planning Commission has commenced the task of preparing the Tenth Plan and the centrally-sponsored schemes that can be transferred to states will be identified.

Resource flows would be linked to performance, he said.

The central government pension liability has reached unsustainable proportions as a percentage of GDP, it has risen from about 0.5 per cent in 1993-94 to one per cent in 2000-01.

As such it is envisaged that those who enter central government services after October 1, 2001, would receive pension through a new pension programme based on defined contributions.

Expressing concern over the increasing share of debt services, Sinha announced that most administered rates would be reduced by 1.5 per cent as of March 2001.

However, government guarantee and tax incentives for these schemes would continue and an Expert Committee would be appointed to provide recommendations on this issue, he said.

He said alignment of interest rates on GPF by the state governments along with the reduced provident fund interest rates at the Centre would further reduce the interest burden of the state governments.

Moreover, because of the anticipated increase in gross tax collection of the Centre, devolution of central taxes to states is expected to increase by over Rs 90 billion in 2001-02 over the current year.

All these measures would help reducing the debt burden of the States and improve their fiscal position, he said.

Budget 2001
Money

Tell us what you think of this report