Worried about the Centre’s burgeoning fiscal deficit, the finance minister has said that additional fund requirements must be kept at a minimum in the second supplementary demand for grants for 2014-15.
“The Supplementary Demand should be sought for the minimum necessary amount after a thorough review of savings (both under Plan and Non-Plan) within the grant and within the approved RE ceilings,” said a missive from the Budget division of the finance ministry to all government ministries and departments.
Additional funds should ideally be sought only for expenditure of advances sanctioned from the Contingency Fund of India, cases where savings can not be re-appropriated under the existing rules, expenditure has to be in0curred for a new service or instrument of service, payment under court orders or in cases where the finance ministry has specifically agreed to seeking funds in the supplementary demand for grants.
The second and final batch of supplementary demand for grants for 2014-15 will be tabled in the Parliament in its Budget Session next month. The Centre had kept its fund requirements at a minimum even in the first set of additional demands with a total cash outgo of Rs 501 crore.
The finance ministry has also directed all ministries to ensure that there additional spending does not breach the revised estimates finalised for 2014-15. Further, the ministry has said that caps relating to expenditure in the last quarter and the last month must be strictly adhered to.
The missive has however, cautioned that while the supplementary demand should be for the minimum necessary amount based on a thorough review of savings, it should be sufficient to cover any foreseable excesses.
“During the recent interaction with the Public Accounts Committee, it has viewed seriously the recurrence of excess expenditure in grants/appropriations and expressed their displeasure over the expenditure in excess of expenditure authorised by the Parliament. Such expenditure is unauthorised expenditure and must be avoided at any cost,” the ministry has warned.
All government ministries are expected to send their proposals for supplementary demands by January 12 to the finance ministry.
The directive is significant given that the Centre’s fiscal deficit has touched 99 per cent of its full year target. While finance minister Arun Jaitley has maintained that 4.1 per cent fiscal deficit target for 2014-15 will be met, the ministry has also issued economy measures to bring down expenditure.