The finance ministry has asked all government-funded autonomous bodies (ABs) and ‘grantee institutions’ to return part of the idle funds parked in their bank accounts or held by them as fixed deposits. The move is part of the revenue-starved government’s effort to rebalance the Budget amid a dire need to stimulate the economy.
Though a precise estimate of the inflows into the exchequer as a result of the latest move is not immediately available, it will likely help the government garner a “substantial amount of funds”. Many of these institutions have over the years accumulated a lot of unspent funds, of the monies received from the Budget. Budget support to these bodies for FY21 is estimated at Rs 87,825 crore.
To illustrate, an experimental exercise of this sort last year freed up about Rs 5,700 crore out of a total of Rs 6,000 crore parked with autonomous/grantee bodies under the ministry of science and technology.
“Departments and ministries are now being strictly asked by the finance ministry to take steps to return unspent amounts with ABs to the Consolidated Fund of India (CFI),” an official told FE.
According to sources, from August 1, over a dozen ABs have been mandated to open Treasury Single Account (TSA) with the Reserve Bank of India for meeting their actual expenditure requirements on a real-time basis. TSA ensures just-in-time releases to ABs to pay vendors and suppliers, bypassing the earlier system of transferring their annual budget allocations in tranches to respective AB’s bank accounts. The move has cut down fresh floating of funds with these bodies as the funds will now remain parked with the CFI until actual expenditure.
The ABs covered in TSA mechanism in the first phase include Kendriya Vidyalay Samiti (whose FY21 budget aid is about Rs 4,260 crore), Indian Council of Agricultural Research (Rs 3,615 crore), Prasar Bharati (Rs 2,700 crore), University Grants Commission (Rs 2,310 crore), Navodaya Vidyalay Samiti (Rs 1,850 crore), Council of Scientific and Industrial Research (Rs 1,650 crore) and Sports Authority of India (Rs 300 crore).
Finance minister Nirmala Sitharaman on Monday sought Parliament’s approval for an additional spending of Rs 2.36 lakh crore during the current fiscal. This implies the government may look at expanding the budget size for the year from the estimated Rs 30.4 lakh crore, though a precise estimate of the expansion will be clear only later.
Some analysts have said the revenue shortfall and extra stimulus requirements could warrant an additional resource mobilistion of Rs 8.5-9.5 lakh crore over and above the likely Budget revenue receipts in FY21. Given the massive plunge in revenue, the Centre was forced to raise its FY21 borrowing by Rs 4.2 lakh crore from the budgeted level to Rs 12 lakh crore. Of this, it has already raised Rs 7.1 lakh crore from the market, which is 73% higher than a year earlier.
Mindful of its fragile fiscal position, the government of late applied brakes on certain spending. Its expenditure in July grew just 6% on year, compared with 46% growth achieved in June and the budgeted spending growth of 13.2% for the whole of FY21.
FE had estimated that the expenditure reprioritisation will entail savings to the tune of Rs 2.8 lakh crore in H1. This is roughly the same as the extra budgetary cost of the fiscal stimulus measures announced so far.
As part of the Centre’s broader drive to cut flab across sectors, nearly 30% of autonomous bodies including research institutions funded by the Centre may lose their independent identity or face closure if a NITI Aayog panel finds little utility of many such institutions in the present environment.
Though it spends such a huge sum, the government has little centralised data what the ABs are doing. The expenditure management commission (EMC) headed by former Reserve Bank of India governor Bimal Jalan highlighted the need for periodic reviews of the working of ABs under various ministries with a view to examine the scope for their merger, disengagement, closure or corporatisation.
Many of these bodies act as interfaces between the government and the public. These include public-funded premier research bodies in various fields of science as well as teaching and training institutions.
Acting on the recommendation of the EMC, the department of expenditure has already asked the autonomous bodies including ICAR to levy adequate user charges to reduce burden on the exchequer. Currently, most of these bodies are fully dependent on government budgetary support.