Saturday, Mar 08, 2003
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By Our Special Correspondent
Finance Ministry sources said that an initial allocation of just Rs. 100 crores had been made for the two schemes which would be carefully worked out so as not to upset revenue estimates. "The liability on these two schemes is not open-ended as the pension scheme has fixed returns with a maximum of Rs. 2,000 a month. The difference between the returns earned by the Life Insurance Corporation (LIC) that will administer the scheme and the promised 9 per cent return to the beneficiary will be reimbursed by the Government. But the LIC cannot get a yield of say 4 per cent and ask the Government to pay the balance 5 per cent to pay the promised amount. The details of investment by the LIC would be worked out carefully,'' the sources added. As for the health insurance scheme, the contribution of Re.1 a day is to come from the insured and only in the case of the BPL (below poverty line) population will the Government step in. "The number of BPL population is known and hence the liability can be worked out. It won't be much, but the benefit to the poor would be tremendous,'' the sources said. As for the new cash management scheme introduced in the budget on a pilot basis, the sources allayed fears of the ministries that allocated funds would lapse due to non-utilisation at the end of the three-month period. "The idea of the cash management system is to have a better control over Government's expenditure and borrowing patterns. Now, an annual allocation is made and the Finance Ministry is not aware when the Ministry concerned might present a cheque for a huge amount. Consequently, it sometimes upsets Government's fund management.'' Under the new proposal, which will initially cover the ministries of food, fertilizers, rural development, agriculture, human resource development and health, discussions would be held between the Finance Ministry and the ministries concerned on their fund requirement for the next three months. Also, any large drawals would be indicated in these meetings so that the Finance Ministry can plan its borrowings accordingly. "For instance, a particularly Ministry might say it does not require much money in the first quarter but would have a greater requirement in the second quarter. The Finance Ministry can then plan its borrowings and cash management accordingly,'' the sources said. Any funds sought during a particular quarter and not used subsequently would not lapse and could be utilised later, they added. "This will help better cash management and closer monitoring in the individual ministries also and possibly a bunching of spending in the last quarter could be avoided.'' It was also clarified that the cash management system would be applicable to Plan and development expenditure and not non-Plan expenditure. "In the second case, the requirement is known and is almost uniform as wages and salaries have to be paid every month,'' the sources said.
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