Expenditure sanction limits may be raised

P Vaidyanathan Iyer & Mamata Singh

Finance Minister Yashwant Sinha is set to overhaul the expenditure framework in the forthcoming Budget by more than doubling the sanction limits of the approval authorities. The move is intended to provide the elusive fiscal stimulus to the economy.

According to senior government officials, Sinha is likely to double the sanction limit of the Public Investment Board, chaired by the expenditure secretary, to Rs 2 billion and above. At present, the PIB is the appraisal forum for all projects entailing expenditure of Rs 1 billion and more.

The Expenditure Finance Commission, also chaired by the expenditure secretary, which approves projects requiring funds over Rs 500 million but less than Rs 1 billion, would be allowed to sanction projects that call for funds of over Rs 1 billion and less than Rs 2 billion.

Similarly, the EFC chaired by the secretary of the administrative ministry would be allowed to sanction projects requiring expenditure of Rs 250 million and above but less than Rs 1 billion. As of now, they are allowed to approve projects calling for expenditure of Rs 150 million and above but less than Rs 500 million.

The proposal to lend more teeth to the various approving authorities was initiated by the Prime Minister's Office and the Planning Commission around five months ago. The idea was to review the existing structure of the PIB and EFC and facilitate the speedy implementation of individual projects stuck at various levels. The Committee of Secretaries had subsequently cleared the proposal in September 2001.

In addition to giving greater powers to the PIB and the EFC, the finance ministry is also in favour of more than doubling the sanction limits for approval of original cost estimates from less than Rs 200 million now to less than Rs 500 million.

Similarly, the administrative minister and the finance minister, who can now approve cost estimates of up to Rs 500 million, would be empowered to clear cost estimates of up to Rs 1 billion. The Cabinet Committee on Economic Affairs would be permitted to approve estimates of Rs 1 billion and above as against Rs 500 million and above now.

Further, the revised cost estimates within 10 per cent of the original approved cost would be decided by the administrative ministry in consultation with the Planning Commission. The revised cost estimates that exceed 10 per cent but are less than 20 per cent of the original estimates would require the approval of the administrative minister and the finance minister.

Also, the revised cost estimates exceeding 20 per cent of the original estimates would require the appraisal of the PIB and an approval by the CCEA.

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