January 2017 News

Drabu Presents Rs 80,000 Cr Budget, Promises Admin Reforms

11 January 2017
Rising Kashmir
Ishfaq Naseem

Jammu: Finance Minister, Haseeb Drabu Wednesday presented Rs 80,000 crore annual budget in the Legislative Assembly and promised a series of administrative reforms including a cap on the release of funds towards the end of the financial year and making of payments to departments and contractors through online mode to cut down on time for clearances. In his budget speech, Drabu laid emphasis on better fiscal management system and sought to overhaul the system of funding of the developmental projects in the state. Besides, outlining that the government will focus on early completion of developmental projects and putting a cap on the release of funds towards the end of financial year, he sought to replace the existing system of financing of the developmental activities through a computerized integrated financial management system (IFMS). He set out his priority in making the payments through online set up and emphasized that the current government will focus on the clearance of the projects in the time bound banner and only after the preparation of detailed project reports (DPRs). He said that the previous practice was to start the developmental works without any prior administrative approval. Later, in his press conference, Drabu said in 2017-18 budget expenditure remains huge and there was a promise to usher in a new developmental phase. However, he said the industry has to get 'back on its feet' and the government can't afford to fully compensate the businesses which have been hit due to the unrest. Drabu said that viable eco-system was needed for the development in the state and the blockades and shutdowns will only act as a roadblock in the development of the state. Giving a break-up of the spending that would be made in the next fiscal year, Drabu said that during 2017-18, state government intends to spend nearly Rs. 80,000 crore. Of the amount, he said, developmental expenditure would be about Rs 31,000 crore and current expenditure would be near Rs. 49,000 crore. 'This level of expenditure will be financed through non debt creating receipts of Rs. 58,000 crore and about Rs. 18,000 crore of borrowings. Given the composition of our revenues, we have a revenue surplus of more than Rs. 9,300 crore. Yet, there will be a resource gap of Rs. 3,137 crore for which ways and means have to be found during the course of the year,' he said. Drabu said the focus will remain on the timely completion of projects under the Prime Minister's Development Package (PMDP), which is also of Rs. 80,000 crores. He said the budget is 'development oriented' and follows the best practices, which have been enumerated in the International Monetary Fund's (IMFs) classification reforms spelt out in its government finance statistics manual. Finance Minister re-organised the 29 departmental demands for grants into 4 major sectors of administrative, infrastructure development, social sector and economic development. Drabu said the government is shifting to the online system of project approvals. 'The current process of budgeting, releasing, and distributing the budget within the government authorities and booking the expenditure against the budget is being carried out manually. The manual practice is a time-consuming process, besides lacking transparency. There is also great difficulty in monitoring and controlling the transactions coupled with non-availability of data for decision making. This often results in either overspending or non-utilization of grants. I am introducing a computerized budgeting system known as Budget Estimation, Allocation and Monitoring System (BEAMS). It is an online computerized system to distribute the budget and to authorize expenditure,' he said. Under the integrated financial management system (IFMS), Drabu said the bills will be processed online to make faster and transparent. In terms of making the developmental expenditure within the stipulated time, he said the Finance department and the Planning Development and Monitoring departments will release 50 per cent of the revenue and capex budget by 10th February for the expenditure that would be booked from 1 April, 2017. 'The administrative departments, in turn, will ensure that the Budget is communicated to HoDs and further down to executing agencies by not later than 20-th February, 2017. In case this is not done, the budgetary provisions will deem to have been conveyed to the executing agencies for taking further forward action,' he said. The FM said under the new system of budget clearances, the administrative departments, HODs and executing agencies will set in motion the procurement and tendering process which should be completed latest by 15 May, 2017. 'This means all budgeted works must be allotted and supply orders issued or procurements made by the specified timeline. Beyond 15th May, 2017, any work or supply orders can be issued only after the permission of Finance Department for which the concerned department will have to submit valid and satisfactory reasons for the delay. The departments shall have to ensure that the tendering process commences only after the DPRs are prepared, administrative approval and technical sanctions are accorded and any other applicable requirements have been met,' he said. Drabu said in 2018-19, only those works will be made a part of the capital outlay and the annual budget for which the required DPR or project report has been completed and other necessary sanctions were obtained. He said the preference will be given to the projects, which will be completed within a span of 3 years, except the mega projects like hydropower projects or large connectivity projects. 'It will need to be ensured that before commencing any work, it has been ascertained from the Finance or Planning, Development and Monitoring Department, as the case may be, that the required funding will be available over a period of three years to ensure completion of work,' he said. Drabu said no re-appropriation will be allowed on the budgetary provisions, which will be made during 2017-18 except to meet any shortfall in the salary provisions or for the purpose of clearing past liabilities. 'This is applicable for the balance period of 2016-17, revised estimated provisions as well. Any such re-appropriation will be made only with the prior concurrence of the Finance Department and all delegated powers of re-appropriation at the level of HoDs, departments or any other level are deemed to be treated as withdrawn with immediate effect. Now that half of the approved budget will be released two months prior to the start of the new Financial Year, the phasing of expenditure during the year must change. Till now, almost 70 to 80 per cent of the expenditure is booked during the last quarter of the financial year. This makes a mockery of the budget numbers besides creating problems of monitoring and liquidity management. From the next fiscal, expenditure during the last quarter should be limited to 30 per cent of budget allocation. Further, in the month of March, the expenditure should be limited to 15 per cent of budget estimates,' he said.

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