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Centre to curb unnecessary grants

In the wake of the soaring oil prices, apart from cutting down official foreign trips the Centre will also observe strict discipline while transferring funds to the states, reports Soumyajit Pattnaik.

india Updated: Jun 23, 2008 02:20 IST
Soumyajit Pattnaik

Austerity measures announced by the Government of India in the wake of the upward revision of petrol, diesel and LPG prices are not confined to cutting down official foreign trips or staying away from ostentatious celebrations. The Centre will also observe strict discipline while transferring funds to the states.

Apart from other provisions, the official memorandum of the Centre on economy measures and rationalisation of expenditure notified earlier this month said, “No amount shall be released to any entity (including state governments), which has defaulted in furnishing utilisation certificates for grants-in-aid released by the Central Government in the past without prior approval of the Ministry of Finance. Ministries/departments shall not transfer funds under any plan schemes in relaxation of conditionalities attached to such transfers (such as matching funding). Where a scheme contemplates a prior determination of each state’s entitlement to Central budgetary support, the actual disbursements shall be limited to these entitlements. Specifically, it will not be open to any Ministry or Department to release excess funds to any State by diverting ‘savings’ in respect of another State, as the practice tends to aggravate imbalances”.

The state governments are further required to furnish monthly returns of plan expenditure – central, centrally-sponsored or state plan – to respective ministries or departments. As per the austerity measures, the unspent balances available with the states and implementing agencies must be taken into account before further releases are made. No further transfers shall be made to a Reserve Fund until unspent balances in the Fund have been utilised.

The memorandum said, “For any deviation from the above, the case should be referred to the Department of Expenditure”.

Funds are released to the states in the normal course as per the recommendations of the Finance Commission and as ‘central assistance’ under the scheme of financing of state’s annual plan.

As part of central assistance, states get funds through such schemes like the Accelerated Power Development Reform Programme (APDRP), Accelerated Irrigation Benefit Programme (AIBP), tribal sub-plan, hill area development programmes, control of shifting cultivation and many such schemes. Centrally-sponsored schemes are those which are formulated with clear targets at the central level with adequate provision of funds made in the Union budget. The objectives, strategy and methodology of implementation of the centrally sponsored schemes are spelt out clearly and funds are released to the states based on their requirements. In such schemes, states also contribute a share.

The Orissa government has asked secretaries of administrative departments to review the progress of submission of utilisation certificates in respect of expenditure incurred up to the preceding month.

Earlier, the Centre had also started a qualitative monitoring of the different employment programmes implemented in the states with Central funds by laying more emphasis on the types of physical assets being created and the kind of people who derive benefits through these schemes.