Corporate sector uses financial incentives to achieve targets. Taking a clue from that, finance minister P Chidambaram has tried to push Central ministries to achieve maximum impact from the modest plan expenditure hike of 6.5% in 2013-14 in the crucial election year.
The finance minister has provided Planning Commission, which disburses money to Central ministries, with an unallocated fund of Rs. 5,000 for next fiscal. "We have Rs. 5,000 crore of free money for ministries doing a good job," panel's deputy chairperson Montek Singh Ahluwalia said.
The plan panel would soon draw parameters for ministries to improving delivery and has the unique identification (UID) payment bridge to gauge the outcome. Finance minister P Chidambaram in first budget of UPA-1 had emphasized on measuring outcomes but there was no mechanism for it.
The panel has the UID platform to check the claims of ministries on disbursement of money to the beneficiaries. The Prime Minister's Office has asked the ministries to create database of beneficiaries of their schemes --- whose traditional record-keepers were state governments --- under the direct benefit scheme (DBT).
Chidambaram has provided money to individual ministries such as Petroleum and Food, whose schemes presently are outside of DBT, to create a similar database for direct transfer for subsidies by end of this year.
As rural development minister Jairam Ramesh quoted, the DBT pilots have shown that expenditure can fall by around 20 % with same number of beneficiaries. "Aadhaar based DBT prevents duplication," Ahluwalia explained.
The UPA government in last two budgets had generously hiked plan expenditure, which mostly includes social sector schemes, but that may not have translated into wider benefit spread.
The reason was that most ministries spent around 40 % of their financial kitty in last three months of the financial year. In the first nine months of this financial year, the Central ministries were able to disburse just 54% of their allocations in the budget, forcing the finance ministry to cut their allocations by 20%.
"I have provided sufficient funds to each ministry consistent with their capacity to spend the funds," Chidambaram said, in his budget speech. The 5,000 crore incentive will be employed by the plan panel to push the ministries to put in place systems for quicker and effective disbursement of funds to the state governments.