Fiscal stress forces govt to push for prudent spending

With Karnataka reeling under fiscal stress, the Finance department has put as many as 27 departments on notice, asking them to get prior approval for spending in the last quarter of the financial year.

While pointing out that this was a routine measure, officials say they have reason to believe that this signifies the financial constraints the state faced. Officials also say that Chief Minister B S Yediyurappa, who is preparing for the 2020-21 budget, may consider cutting allocation in some departments.

In an order, issued earlier this week, that lays down guidelines to govern fund releases in the January-March quarter, the Finance department has given its concurrence to departments for statutory payments such as salaries, building expenses, pension/retirement benefits, scholarships, purchase of medicines for hospitals and so on.

But for schemes run by departments, including Krishi Bhagya, incentive to milk producers, rejuvenation of tanks, forest protection, subsidies for Anna Bhagya, slum improvement, establishment/improvement of industrial clusters and so on, prior approval of the Finance department will be necessary, the order states.

The Finance department’s push for prudent spending comes in the wake of some economy measures that have been put in place already. For instance, the Finance department has revised the guidelines for officials’ telephone expenditure, in order to cut costs.

Also, the Finance department has taken exception to the creation of new or additional staff positions without prior approval.

With less than three months left for the fiscal year to end, the government needs to mop up around Rs 31,400 crore in taxes to meet its target of Rs 1.19 lakh crore. The decline in revenue adds to the financial woes caused due to the delay by the Centre in releasing various funds, including GST compensation.

Save for Excise, all other major revenue generating departments - Commercial Tax, Stamps & Registration, Transport and Mines & Geology departments - are
behind in reaching targets for the fiscal. Yediyurappa, the finance minister, has in the recent past publicly lamented the financial constraints faced by the government.

In the 2020-21 budget, some departments may see a cut in their allocation. “Whatever departments have saved this financial year will be the cut they will face in the budget for the next financial year,” a senior IAS officer said.