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No new funds to govt departments without utilisation certificates

14 Jan 2013 Evaluate

Worried to contain the fiscal deficit at 5.3 per cent of GDP for current fiscal, the finance ministry has reportedly said that no new funds will be provided to departments in the last quarter unless they provide 'utilisation certificates' for previous allocations. On under utilization of provided funds, finance ministry has reported that several departments have been sitting on funds that have been allocated to them two years ago. The government pays around eight per cent interest on the credit that it raises from the banking system, and it does not make any sense for government departments or public sector undertakings under their control to sit on this cash when they are not going to utilise it.  

While, the reduction in quantum of funds, which are not properly utilized by the public sector departments, will lead to a significant saving in the government's expenditure in the current financial year it will lead to more allocations of funds to the departments like social sector programmes, defence and even the home ministry.

Further the government has planned to speed up the disinvestment in public sector companies and accelerate the tax collections from companies such as Nokia in order to collect more revenue in the remaining part of the financial year. Additionally, it is also expected the increasing revenue collections in telecom companies from one-time spectrum fee and reframing of spectrum auction scheduled to March, help to curtail the fiscal deficit.

The government is expected to raise Rs 30,000 crore through the disinvestment route. Earlier, in 2011-2012, the government fell way short of the target of raising Rs 40,000 crore through disinvestment. Now the target was turned down to Rs 30,000 crore for the current fiscal. 

However, it would be difficult for the government to contain the fiscal deficit because of the reasons like rising subsidy bill for petroleum products which is close to the Rs 163,000-crore mark with food and fertiliser subsidies and sluggish taxes collection in this fiscal. The Kelkar Committee on fiscal consolidation had observed that overall tax collections, including indirect taxes, could fall short of the target by as much as Rs 60,000 crore.

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