The government is planning to increase its reporting limits for new policy-related expenditure by ministries and departments after getting approval from the Parliament’s Public Accounts Committee (PAC). This is aimed at reducing the frequency of supplementary demands for grants and speeding up the execution of projects.
Background of Reporting Limits
The reporting limits for new policy-related expenditure, also known as ‘New Service’ and ‘New Instrument of Service’, are applied whenever the expenditure arises out of a new policy decision or an expansion of an existing policy that was not brought to the notice of Parliament earlier. The last revision of these limits was done in 2006.
According to a report by the PAC, the current limits have become inadequate due to the substantial growth in budget size and GDP over the years. This has led to a large number of proposals being forwarded to Parliament for reporting or approval, causing delays and inefficiencies.
Proposal for Higher Reporting Limits
The PAC has approved the Finance Ministry’s proposal to raise the reporting limit for new policy-related expenditure by ministries and departments to above Rs 50 crore but not exceeding Rs 100 crore. For amounts exceeding Rs 100 crore, prior approval of Parliament would be mandatory.
Similarly, the reporting limit for ‘New Instrument of Service’ has been fixed at up to 20 per cent of the original appropriation or up to Rs 100 crore, whichever is higher. For amounts exceeding 20 per cent of the original appropriation or above Rs 100 crore, prior approval of Parliament would be required, subject to savings within the same section of the grant.
The proposal is expected to come into effect from 2024, after a gap of about 18 years since the last revision.
Implications
The revision of the reporting limits is expected to have several benefits for the government and the economy. Some of them are:
- It would reduce the number of supplementary demands for grants presented to Parliament during a financial year, thereby saving time and resources.
- It would also enable faster implementation of projects and schemes by the ministries and departments, leading to better outcomes and service delivery.
- It would also enhance transparency and accountability in public spending by ensuring that only significant policy changes are brought to the notice of Parliament.
- It would also align India’s fiscal management with international best practices and standards.
Recent Blog : IREDA, PNB Join Hands to Co-Finance Green Projects