Cabinet nod not needed for projects under Rs 1,000 crore

By: |
New Delhi | Published: November 14, 2014 9:31:48 AM

The Narendra Modi government has decided that only schemes and projects worth...

Prime Minister Narendra Modi during a meeting at Nay Pyi Taw in Myanmar. PTIPrime Minister Narendra Modi during a meeting at Nay Pyi Taw in Myanmar. PTI

The Narendra Modi government has decided that only schemes and projects worth over Rs 1,000 crore require the approval of the Union Cabinet or the Cabinet Committee concerned.

The decision is expected to significantly cut down the number of proposals that require Cabinet approval and lead to quicker decision-making at the ministry level. Earlier, projects worth Rs 300 crore and above required Cabinet clearance.

The government has also substantially enhanced the financial powers of ministers and secretaries when it comes to clearing public funded plan schemes and projects.


Secretaries were earlier authorised to approve projects worth less than Rs 25 crore, but have now been empowered to clear projects of up to Rs 100 crore. The secretaries, however, will have to approve these projects “in consultation with (the) Financial Advisor’’.
Similarly, ministers who were earlier authorised to approve projects ranging from Rs 25 crore to Rs 150 crore have now been allowed to clear projects from Rs 100 crore to Rs 500 crore.

The minister-in-charge and the Finance Minister have been authorised to decide on approvals for projects in the Rs 500 crore to Rs 1,000 bracket, except in cases where special powers have been delegated by the Finance Ministry. Earlier, only projects between Rs 150 crore to Rs 300 crore were decided by them.

The Rs 1,000 crore-plus norm will apply for all Cabinet-level clearances, except in cases “where special thresholds have been laid by the Cabinet/Committee of the Cabinet’’.

A recent example of how these new guidelines have impacted the decision-making process is a Rs 597-crore proposal to set up the National Film Heritage Mission (NFHM) that is now being cleared by the Information & Broadcasting ministry.

“A Cabinet note had been prepared for the setting up of NFHM which is aimed at preserving the country’s filmic legacy. But we were recently informed that since this project costs less than Rs 1,000 crore, it doesn’t require a Cabinet clearance,” a government source told The Indian Express.

The government has also decided that all schemes and projects which involve setting up of new companies, autonomous bodies, institutions/universities, and special purpose vehicles, etc, would be appraised by the Expenditure Finance Committee (EFC) chaired by Secretary (Expenditure). This appraisal would be conducted irrespective of the outlay or the nature of the ministry/department, and all such cases would need to be approved at the level of the Cabinet or a Cabinet Committee.

The Finance Ministry has also come out with a list of dos and don’ts for ministries and departments involved in appraising and approving public-funded schemes and projects. It has asked ministries to ensure that proposals considered within the delegated powers “are subjected to rigorous examination in project design and delivery”, adding that “careful attention should be paid to recurring liabilities and fund availability after adjustment of the committed liabilities”.

“Ministries should avoid the tendency to operate multiple small schemes without focus on meaningful outcomes. While considering proposals for continuation of on-going schemes, a careful rationalisation must be done through merger and dropping of redundant schemes,” the Finance Ministry has said.

It has also directed that “small value proposals should not be mooted by splitting schemes into individual schemes, like buildings, training programmes, procurement of equipment, etc, for the same autonomous body”.

The Finance Ministry has further directed that “outcomes should be measurably defined, and adequate attention should be paid to the quality of monitoring and evaluation” “Shortcomings pointed out in the evaluation reports should be addressed as quickly as possible,” the ministry has said.

Do you know What is Repo Linked Lending Rate (RLLR), Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.