1. As oil prices soar, here’s what’s emerged as key for India

As oil prices soar, here’s what’s emerged as key for India

With the the price of oil hardening and given the pressing need to keep the momentum in public capital spending, the government is looking at plans to improve expenditure management with a sense of urgency.

By: | New Delhi | Updated: June 17, 2016 7:15 AM
OIL PRICES The EMC, headed by former Reserve Bank of India governor Bimal Jalan, had given a series of reports to the government comprising over 200 specific recommendations.

With the the price of oil hardening and given the pressing need to keep the momentum in public capital spending, the government is looking at plans to improve expenditure management with a sense of urgency.

“We have asked all the ministries to give a report on the recommendations of the Expenditure Management Commission (EMC) on what their views are and when they can implement the proposals,” finance secretary Ashok Lavasa said in an interview, reports Prasanta Sahu in New Delhi.

He said disbursal of benefits under as many as 147 schemes will be facilitated by the direct benefit transfer (DBT) platform by the end of the current financial year; last year, 67 schemes were DBT-enabled.

The EMC, headed by former Reserve Bank of India governor Bimal Jalan, had given a series of reports to the government comprising over 200 specific recommendations.

These covered an entire gamut of issues from enhancing the efficiency of public investments to increasing the use of technology to transfer subsidies to the poor.

Lavasa said he has recently discussed the Jalan panel’s proposals with financial advisers in ministries for follow-up action. The ministries, he said, were already implementing steps to rationalise expenditure. The DBT scheme enabled by the JAM trinity (Jan-Dhan, Aadhaar and mobile connections) gave the efforts a leg up.

“The effort is to get as many schemes as possible on the DBT platform,” he said. The Centre disbursed Rs 62,000 crore to 30.8 crore beneficiaries via DBT-enabled schemes in FY16, the secretary said, adding that the cumulative DBT so far has been Rs 1,08,000 crore. People get LPG subsidy, wages under the employment guarantee Act, scholarships, etc, in their bank accounts thanks to DBT. A pilot programme to implement DBT in kerosene is on and if successful, would be replicated all over the country.

Even though oil prices have jacked up in recent weeks, Lavasa said he does not expect it to substantially alter budget plans including the capital expenditure target. Thanks to low crude oil prices (Indian basket), which averaged $46.17 a barrel in FY16 compared with $84.16 in FY15, the government managed to contain the subsidy bill as well as raise additional revenue by increasing taxes on fuels. These helped it contain the fiscal deficit at 3.9% of GDP in FY16 even after effecting a 50% increase in Plan capital spending that helped economy to grow at 7.6%.

The Indian basket of crude ruled at $46.52 a barrel on Thursday. He said it was premature to comment on whether government will cut taxes on petroleum products if prices rise to beyond its comfort level.

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