The biggest challenge that we face is the fiscal
challenge. The United Front government is committed to bringing
the fiscal deficit to below 4% of GDP. This is what the Common
Minimum Programme says and this is what I intend to do over a
period of time. One plank of the strategy is, of course, to raise
more revenues. But without a credible public expenditure
management policy, no programme of fiscal deficit reduction will
be sustained. I believe that no one is against austerity or
efficiency as such. At the same time, I accept the position that
sound expenditure management is not a mere technocratic exercise
but involves issues of equity, fairness and non-discrimination.
In order to work out a reasonable policy in this regard, I
propose to appoint a high-level Expenditure Management and
Reforms Commission comprising distinguished political leaders,
economists and administrators. This Commission will be given four
months - and I hope no more- to submit its recommendations on
public expenditure management and control as far as the Central
government is concerned. The report will be made public
immediately so that we can generate an informed public debate on
an issue that has a vital bearing on our economic future.
I also propose to place before the House a
discussion paper on subsidies. The paper will list all the
subsidies, visible and hidden, so that there can be an informed
debate and a consensus on the overall level of subsidies as a
percentage of GDP and their appropriate targeting.
In the meantime, I intend to be strict in matters
relating to cash management, project portfolio review, adherence
to budgetary ceiling and adequacy of returns from public sector
enterprises.
Hon'ble Members are aware that in September 1994
an agreement was signed between the Central Government and the
RBI to phase out the system of ad-hoc treasury bills by 1997-
98. The experience last year and in the current year so far has
shown the difficulty of staying below the within-year limit.
Nevertheless, I remain convinced that the system of ad-hoc
treasury bills must be phased out. However, before this can
happen we need to put in place a better expenditure control
mechanism. We also need a more transparent method of defining and
reporting the true budget deficit, including all forms of
monetisation. I shall present concrete proposals in this regard
at the time of presentation of next year's budget so that RBI can
have greater autonomy in formulating and implementing monetary
policy.
