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FINANCE MINISTER EMPHASIZES NEED TO ENCOURAGE CAPITAL EXPENDITURE MEETS FINANCIAL ADVISORS
New Delhi~ July 3, 2001
Union Finance Minister Shri Yashwant Sinha called upon all the Ministries of the Government of India to ensure that capital and productive expenditure is encouraged while the revenue expenditure is restricted and controlled. The Minister who was addressing a meeting of the Financial Advisors(FAs) of various Ministries of Government of India here today pointed out that this was necessary to bring about a turn around in the economy of the country.
Expressing concern over the slow down of the economy and disappointment over recent GDP growth figures projected by CSO he emphasized that the Financial Advisors of the Ministries had a crucial role in ensuring that Govt. expenditure "has a quality attached to it" since Government is borrowing money at a high cost and it is necessary to ensure that it is utilized in a constructive manner. In this context spacing of expenditure also assumes critical importance. He called upon FAs to ensure more systematic management of expenditure and avoid a situation in which bulk of expenditure takes place in the last quarter of the year. He also asked them to carefully scrutinize non-plan expenditure of their Ministries. This he remarked was essential for the success of the economic management of the country. The Finance Minister called upon the Financial Advisors to evolve a definite system of a quarterly review of expenditure projections so that appropriate steps can be taken to monitor and manage expenditure properly.
Speaking about the situation where many agencies have huge unspent balances of Plan funds released from Administrative Ministries the Finance Minister urged the FAs to monitor the unspent balances on a month to month basis and also advise the Administrative Ministries in the matter of release of funds. He felt that this kind of situation in which district level organizations are holding back unutilized Central Government Plan funds while the state governments have been facing a strain on their finances needed to be rectified urgently. "It is very distressing if the money supposed to reach the people of the country goes from the Centre and just gets deposited with these agencies" he commented.
Emphasizing the importance of zero-based budgeting the Finance Minister urged the Financial Advisors to ensure that zero-based budgeting becomes a reality in the Tenth Plan. He felt it was very crucial for optimizing and containing growth of Government expenditure and utilizing scarce resources in a more productive manner. No Project of the Ninth Plan would automatically be allowed to graduate into the Tenth Plan without being subjected to
a rigorous and thorough scrutiny he said.
Speaking about the implementation of the recommendations of the Economic Reforms Commission Shri Sinha urged the FAs to coordinate and ensure that the deadline of the 31st July is observed. In this context clear guidelines have been issued to all Ministries regarding drawing up of recruitment plans as an integral part of Government's commitment to downsizing.
Taking serious note of the short-fall in non-tax revenue from the dividends and interest receipts from PSUs the Minister asked the FAs to devote greater attention to these aspects since default in these areas distorts the accounts of the Govt. Issues relating to closure restructuring of loss making PSUs would also need to be expeditiously addressed he said.
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