Many firsts in FM's pre-Budget parleys

FM KICKS OFF BUDGET-MAKING TODAY

Chidambaram to meet ministries' financial advisors, PM's economic council.

For perhaps the first time, Finance Minister P Chidambaram is slated to directly interact with financial advisers of central ministries and departments as part of the customary interactions that are held every year in the run-up to the Union Budget.

Chidambaram is also holding a discussion with the Economic Advisory Council (EAC) to the prime minister headed by C Rangarajan. This is also a first, North Block sources say.

The finance minister's pre-Budget consultations kick off on Monday with a meeting with agriculturists, followed by interactions with representatives of the Indian industry the day after.

Chidambaram will also meet trade unionists and several economists for inputs. He is then expected to seek political inputs by meeting his Congress colleagues. He willl meet the opposition leaders a few weeks later.

The meeting with the financial advisers is important. Sources view it as Chidambaram's initiative to cut through the red-tape in central ministries and departments and directly interact with the financial advisers so that he can focus on better expenditure management.

The fianancial advisers are representatives of the Ministry of Finance's expenditure department and are responsibile for managing the finances of the ministry or the department they are attached with.

They can belong to any central government service and have enormous responsibility (and influence) within the system as they are independent of the administrative set-up, according to the financial adviser of a key defence ministry arm.

A key concern of the finance ministry has been the tendency of the annual expenditure to get bunched up in the last quarter.

That is changing now as the new expenditure management system, started last year, imposes greater spending discipline.

For instance, no department or ministry can spend more than 33 per cent of its annual allocation in the fourth quarter of the financial year.

The financial advisers are also likely to be asked to gear up for the Outcome Budget presentation as Chidambaram has been increasingly focusing on outcomes rather than outlays.

The consultation with the prime minister's council will come in the backdrop of Rangarajan, who headed the committee on financial inclusion, submitting a report to Chidambaram on enhancing the reach of financial services to cover more Indians.

The committee has conducted several exercises to provide policy inputs for better economic management.