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Union Budget 2001-02 »
Finance Minister Speech : Expenditure Management
Expenditure Management
79. I intend to carry forward the process of bringing about structural changes in the composition of Central Government expenditure and effect economy in non-plan revenue expenditure with greater vigour while improving the quality of plan expenditure. For this, I propose to take the following initiatives:
lUser charges for services provided by government and its agencies will be revised keeping in view the increased cost of these services. A portion of this increase will be provided to enhance the maintenance and quality of these services.
lSimilarly, postal rates will be revised moderately to contain the rising postal deficit.
lAll requirements of recruitment will be scrutinized to ensure that fresh recruitment is limited to 1 per cent of total civilian staff strength. As about 3 per cent of staff retire every year, this will reduce the manpower by 2 per cent per annum, achieving a reduction of10 per cent in five years as announced by the Prime Minister.
lThe Surplus Pool under the Department of Personnel will be streamlined and equipped to redeploy and retrain surplus staff. Employees in the Surplus Pool will also be offered an attractive VRS package.
lStandard licence fee (rent) on government accommodation will be enhanced by 50 per cent for Group A, 25 per cent for Group B and 15 per cent for other categories of staff with effect from April 1, 2001.
lFacility of LTC to Central Government employees will be suspended for 2 years for the remaining part of the four-year block period except for employees who are entitled to last LTC before retirement.
lUse of Information Technology in government activities with large public interface will be maximized to promote efficiency. For this purpose, operations like GPF, pension, pay and accounts offices, passports, income tax, customs, central excise, will be fully computerized by March 31, 2002. Public sector banks and insurance companies are also being asked to complete computerization of their operations within this period.
80. The Expenditure Reforms Commission, which was set up last year, has presented reports concerning downsizing in 6 Ministries and Departments. These include Department of Economic Affairs, Ministry of Information & Broadcasting, Ministry of Coal, Department of Heavy Industry, Department of Public Enterprises and Ministry of Small Scale Industries. Reports of the Commission concerning other Departments will also be received within the next six months. These recommendations will be implemented by July 31, 2001 and identified surplus staff transferred to the Surplus Pool.81. Charity, it is said, must begin at home. I believe austerity, too, must begin at home. To lead by example, based on the recommendations of the Expenditure Reforms Commission, I propose to abolish three secretary/special secretary level and two joint secretary level posts in the Department of Economic Affairs. This will be done in stages by 31, July. In addition, another 44 posts of directors and below will be abolished, as against 31 recommended by the ERC. 1675 posts are being abolished in the Currency and Coinage Division which will be restructured and corporatised. The National Savings Organisation is to be downsized from a level of 1191 staff to about 25. I have asked ERC to provide their recommendations in respect of the Departments of Revenue and Expenditure also. I am confident that this will expedite the process of right sizing the establishments in all the Ministries/Departments of Government.
82. The Planning Commission has commenced the task of preparing the Tenth Plan. Given the severity of resource constraints, improvement in the quality of government spending is of the essence. It has therefore been decided to subject all existing schemes, both at the Central and State levels, to zero based budgeting and to retain only those that are demonstrably efficient and essential. Furthermore, all schemes that are similar in nature will be converged to eliminate duplication. Centrally sponsored schemes that can be transferred to States will be identified. Resource flows will be linked to performance. Necessary procedural changes will also be made to speed up the decision making process for approval of schemes. Utmost importance will be given to decentralized planning.
