Haseeb Drabu initiates major reforms in JK’s fiscal management

Asks Administrative Secretaries to come up with productive expenditure framework; ‘JK to have new economic policy in place’

5 Dariya News

Srinagar 15-Oct-2015

In a significant initiative aimed at initiating public expenditure reforms and ensuring effective management of resources, Minister for Finance, Labour & Employment, Dr Haseeb Drabu has announced advancing of budget presentation for the next financial year so that all administrative formalities are completed well in time . He said this will enable that the resources are kept available by March ending and public works are started by April next year, when the working season starts.Speaking at a three-hour long marathon budget preparatory meeting of the administrative secretaries here last evening, Dr Drabu asked them to evolve expenditure policies of their respective departments regardless of the resources required. He emphasized quality of expenditure over the quantum of resources and insisted this is the only way to ensure that the surging transaction costs on governance are used to affect productive changes.

Dr Drabu said to increase the capacity of the economy and infuse fiscal discipline, the annual Budget for 2016-17 would be presented in January followed by mid-year review in August. “This will ensure that the objectives of the budget are met satisfactorily,” he said and added and if there are some problems, we can initiate course corrections like re-allocation, re-appropriation or other corrective measures within time.

The Finance Minister said the biggest problem with JK’s economy is that the system is not able to spend more due to low working period and other issues. “So what I propose is to start early, so that planning and tendering process kick-starts in right earnest and development activities do not suffer on this count and are insulated from vagaries of nature and short working seasons in some areas,” he said.“Budget should not be about numbers but it must outline the fiscal policy and development strategy of the government and must be directed towards policy outcomes on government priorities,” Drabu said adding; “Expenditure efficiency must define the outcome of expenditure and for this we can attempt zero budgeting than incremental budgeting, which is in vogue.”

He said availability of resources comes only next to the quality of expenditure. “We may have lot of resources but more important is how we are spending and for what?” Drabu said and called for institutional audit and social audit going side by side. He said 14th Finance Commission award has made it abundantly clear about the availability of resources with the state government which must encourage us to use it properly and as per our priorities with emphasis on improving absorption capacity of the state.

While Drabu suggested the state’s General Administration Department should move beyond the routine transfers and become a the Human Resources Development (HRD) cell of the state government, the IT department should in fact get converted into a service that facilitates governance. He said IT is the only platform that can help J&K reduce the transaction costs of the governance, which, right now are the highest in the country. Similarly, he said the state’s Planning Department should evolve into a Capex Strategy and Monitoring department. This will give the particular department a new role in wake of the policy shifts at the federal level.Stressing on increasing the efficiency of resources, the finance minister said that after spending the money, the state should be able to verify the outcome in terms of assets created.

The Finance Minister said the government is going through a process to clean up the budget and make it clearer to public. We are doing away with the complexities like Plan and Non Plan definitions and moving towards a simple Revenue and Capital budget which even a layman can understand, said the Finance Minister.The Finance Minister also called for postponing the economic survey towards mid of next year. “The current economic survey in March contains figures of last September which doesn’t serve any purpose. So let us do the economic survey in August which will be based on the latest data of the same year,” said Dr Drabu.The Finance Minister said that the real value of the budget is not its size of revenue but its quality and structure, which the state is trying to achieve. The state is trying to evolve a new economic policy which would be different than the past practice based on control finances, the finance minister said. I want to make the system autonomous and devolve more powers to departments, he said.

Emphasizing importance of management of assets that state government is creating, Drabu said maintaining the assets almost equals creation of assets and every department should keep part of the budget aside for maintenance of assets.Dr Drabu also called for social audit of all institutes to determine what they are doing with public money. “We have some outstanding technology and research institutes like Universities and Hospitals who take money from us but we don’t know what they do. The Social Audit will help us to see their achievements. May be some of them have a patent or two and that will become a goldmine for us,” said Dr Drabu.The Finance Minister also expressed his concern over Centrally Sponsored Schemes, for which state will ultimately have to find the resources to fund.

Dr Drabu asked the department to give priority to complete old projects before taking up new projects. To contain the rising prices of land and provide an alternative to investments, Dr Drabu also proposed to float Land bond.The Finance Minister asked the health department to explore Public Private Partnership model in case of some health institutes and diagnostic centres. For education he asked the concerned department to explore e-learning, smart classes for urban as well as rural areas.Regarding various state corporations, the Finance Minister said that the government will work to clean them up and divest over a period of time.Chief Secretary, Mr B R Sharma, Commissioner/Secretary Finance, Mr Navin Kumar Choudhary, administrative secretaries and officers of the Finance and Planning Departments were present at the meeting.