After PAC nod, hike in reporting limits for Ministries' spending proposed
- After a gap of about 18 years, the government is set to revise its financial limits for ‘New Service’ and ‘New Instruments of Service’ after getting approval from Parliament’s Public Accounts Committee (PAC).
Key Highlights
- The panel has approved the Finance Ministry’s proposal to raise the reporting limit for new policy-related expenditure by ministries/departments to above Rs 50 crore
- But not exceeding Rs 100 crore along with mandating prior approval of Parliament for spending over Rs 100 crore.
- The approval, which has come in line with expansion in GDP growth and the Budget size, has fixed the reporting limit for ‘New Instrument of Service
- To up to 20 per cent of the original appropriation or up to Rs 100 crore, whichever is higher.
- The last such revision had come into effect in 2006.
- Due to the low financial limits for new policy-related expenditure earlier, there has been a reported increase in the number of supplementary proposals from the ministries/departments.
- The time taken in seeking Parliament’s approval would then cause delay in execution of projects, the report said.
New Service (NS) and New Instrument of Service (NIS)
- New Service (NS) refers to expenditure arising out of a new policy decision, not brought to the notice of Parliament earlier, including a new activity or a new investment.
- New Instrument of Service (NIS) refers to relatively large expenditure arising out of important expansion of an existing policy.
- The financial limits for ‘New Service/New Instrument of Service’ are applied whenever the expenditure is incurred on account of the expansion of an existing policy.
- According to the report, a substantial growth in budget size has diminished the delegated powers of the ministries leading to voluminous proposal(s) being forwarded, for reporting/approval of the Parliament.
- The PAC and the Comptroller and Auditor General of India (CAG) have been pointing to the growing instances of unnecessary supplementary, re-appropriations not adhering to the NS/NIS limits; and re-appropriations without reporting to Parliament or without obtaining prior approval of the Finance Ministry.
- The PAC had raised concerns over excess expenditure, ranging between 10.04 per cent to 79.77 per cent,
- Incurred during FY 2019-20 for grants/appropriations even after obtaining high amounts of supplementary grants by the ministries/departments to meet their additional requirements.
- While explaining the need for the proposed revision, the Department of Expenditure under the Finance Ministry in its submission to the PAC said
- That in the last four financial years, the ministry took 2,500 tokens to the notice of the Parliament for reappropriation.
Prelims Takeaway
- Appropriations
- Grants