The zero deficit budget

22/11/2020

The development works and projects have their own gestation period. It is highly necessary that these gestation periods are carefully evolved, determined and controlled. It has generally been seen that project construction periods, is not adequately controlled, can lead to time and cost over runs, further leading to the projects becoming unviable though considered to be viable at the time of their formulation. It then becomes difficult to accommodate these projects within the pre-fixed Plan Outlays without affecting other development programmes. In case of major projects, the Government will go for better guidelines for determination of financial requirements on annual basis. The Jammu and Kashmir Government has revised its `Budget Manual' setting roadmap for zero deficit budget, constitution of Special Committees for Fiscal Management and monitoring developmental works especially National Highways, bridges and road networks, completing process for distribution of funds before close of April every year, earmarking 10-15 percent of capital component of all departments for maintenance and retaining three major previous fiscal reforms including Ways & Means (W&M) from the Reserve Bank of India (RBI), Jammu and Kashmir Fiscal Responsibility and Budget Management Act, 2006 (JKFRBM) & Budget Estimation Allocation Manage-ment System (BEAMS). The revised `Budget Manual' was approved few days back by Lieutenant Governor Manoj Sinha and released by Financial Commissioner Finance Department. It was released by the Union Territory Government under Section 67 of Jammu and Kashmir Reorganization Act, 2019. As per the Finance Department document, the Government will balance the budget to make it zero deficit by going for Additional Resource Mobilization (ARM), expenditure compression where possible and through market borrowings.
The `Budget Manual' said the Union Territory Government will go ahead with three major financial reforms of the previous Governments including BEAMS, JKFRBM & W&M. The erstwhile Legislative Assembly had enacted JKFRBM Act, 2006 which shall remain in operation after implementation of the Jammu and Kashmir Reorganization Act from the appointed day without amendments as required under law and as per the revised `Budget Manual'. It added that new system of classification coupled with implementation of BEAMS will be followed for Capital Expenditure purposes also. It will bring out a clear picture to facilitate computerization of accounts and formulation of the budget with real time on-line analysis. In another significant decision, the Government has decided to constitute Project Clearance Committee(s) for their recommendation to taking of these as a part of the J&K budget. It will be incumbent upon the Departments to constitute such Committees with the concurrence of the Finance Department. The Government has called for management of subsidies in highly effective manner to minimize the chances of pilferage. Certain road works are financed from Central Road Fund and are described as CRF works. Subvention from this Fund is earmarked for taking up of road works as approved by the concerned Ministry of Government of India. Estimates for such works should be incorporated in the budget.

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