The expenditure department of the finance ministry has objected to a plan to set up special purpose vehicles (SPVs) to run the back-end operations of a host of government schemes requiring technology platforms.
The department has made its objections known in its comments to finance secretary RS Gujral who circulated a note asking when such SPVs could be set up.
The proposal to house the IT set-ups in such companies was advocated by the Nandan Nilekani-led committee, the Technology Advisory Group for Unique Projects (TAGUP).
The committee, which included former expenditure secretary D Swarup and former Sebi chairman CB Bhave, was set up to advise how technology could be used dramatically in large government programmes.
Successful implementation of many reform measures ? goods and services tax, new pension scheme, tax information network, banking correspondent models (all in the finance ministry), rural employment guarantee scheme, unique ID and rural health management ? depends on technology platforms.
The committee has given a report that describes how the best synergy can be created to make programmes reach the poor. As per the proposed model, while government will frame the policies, the grunt job of implementation will be through an SPV which will be a private-public sector partnership.
The expenditure department pointed out to Gujral that, ?since (these) project activities are already going on and do not involve complexities and technological challenges that would require sourcing it out to the SPV, (the departments concerned) would be able to handle it within their existing set up.?
The Nilekani committee has asked for setting up an expenditure information network that will monitor release of funds scheme-wise and track outcomes.
The expenditure department?s objections have also been echoed by the department of economic affairs when the note has asked for setting up a back office for debt operations ? the national treasury management agency.
The Nilekani plan is to set up SPVs as private companies, with at least 51% ownership. However, no single private entity should hold more than 25% in the national information utility ? the IT platform. On the other hand, the government ownership should be at least 26%.
The revenue department under Gujral, on the other hand, is going ahead with the goods and services tax network, which is already approved by the Cabinet and there has been some progress in tax information network.
The treasury management agency was planned to create databases about the central government?s debt and contingent liabilities and plan out bond market processes and market mechanisms for bond issuance and trading.
The group had said that while significant strides in IT implementation have been undertaken in the NPS, there is a need to further leverage recent technological innovations in e-governance, banking and financial networks to develop greater efficient mechanisms that leverage use of IT in an end-to-end manner.
In February last year, Nilekani submitted the report to finance minister Pranab Mukherjee. Thereafter, the finance minister had constituted a committee to study the report. Last month, the government approved setting up of an SPV ? GST network? to provide IT infrastructure for rolling out of the proposed indirect tax regime goods and services tax. The SPV would be incorporated as a Section 25 (not-for-profit), non-government, private limited company in which the government will retain strategic control.