The Union Government decided to appoint former RBI governor Bimal Jalan as the head of the Expenditure Management Commission on 12 August 2014. He would be tasked to suggest ways for managing public finances by reducing food, fertiliser and oil subsidies to include fiscal deficit.
Expenditure Management Commission
Union Finance minister Arun Jaitley had announced the setting up of an Expenditure Management Commission in the Union Budget 2014-15 in July 2014. The purpose of setting up the commission is to cut-off the spending and review government expenditure to get maximum output.
The Commission will submit its interim report before the Budget of 2015-16 and its final report before the Budget of 2016-17.
Subsidies on Food, petroleum and fertilisers
In revised estimates for 2013-14, the subsidy bill on food, petroleum and fertilisers was 245451.50 crore rupees. For 2014-15, the subsidy bill is estimated to be 251397.25 crore rupees.
The increase in subsidy bill for 2014-15 is due to the increased allocation for fertiliser sector. The government estimated total fertiliser subsidy bill of 72970.30 crore rupees than the amount of 67970 crore rupees that was proposed in the interim budget.
The government allocated the total amount of 115000 crore rupees which includes a provision of 88500 crore rupees for the implementation of National Food Security Act.
Previous Expenditure Reforms Commission
During the year 1999-2000, Atal Bihari Vajpayee government initiated Expenditure Reforms Commission (ERC) headed by former finance secretary K P Geethakrishnan. This commission recommended for reducing the central government machinery and winding up of some government departments. Certain recommendations of the commission were implemented during the reign of finance minister Yashwant Sinha.
In 2002, UPA government appointed Vijay Kelkar Committee, former finance secretary, for fiscal consolidation plan which included reduction in subsidies. His panel suggested increasing diesel and cooking gas prices gradually. His recommendations are followed today.
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Who: Bimal Jalan
When: 12 August 2014