About a third of the public money raised by the government for investments cannot be voted upon by Parliament.
Last week, the Cabinet added a little more to that purse — the secondary and higher education fund, known as the Madhyamik and Uchchtar Shiksha Kosh (MUSK).
It makes good government expenditure a bit more opaque without necessarily making the quality of spending better. It is also against its instinct when raising revenue to finance some of these schemes.
At the same meeting, the Cabinet approved a transparent means to raise Rs 9,020 crore to finance key irrigation projects in 2017-18 under the Pradhan Mantri Krishi Sinchayee Yojana.
Both decisions sit well with the changes happening in the Budget, with more emphasis on expenditure management, while revenue raising becomes more predictable.
There were already seven schemes that the government shields from Parliament scrutiny by placing these outside the Consolidated Fund of India, as government Budget papers show. MUSK will be the eighth on the list.
Article 266(2) of the Constitution allows the government to provide this cover. At one time, this cover, known as Public Accounts, was mostly meant to house small savings schemes such as the Public Provident Fund and postal savings schemes where the government basically acts like a banker. So the shield from Parliament voting to, say reduce rates, was necessary to ensure people had the confidence to invest in those funds.
In recent years, this cover has expanded massively to include mega schemes such as the Central Road Fund, Clean Energy Fund, Rashtriya Swachhata Kosh, and Krishi Kalyan Fund.
In the previous financial year, the aggregate money that travelled through these funds was Rs 1,19,334 crore — a big sum when compared with the Rs 3,75,402.83 crore the government allocated for all of its other major expenditure schemes, excluding defence capital expenditure and subsidies. This financial year, the Budget estimate for the seven sequestered schemes was much lower. But that is sure to be breached later when the actual demands surface.
The finance ministry had in 2010 advised against making MUSK a part of Public Accounts. The department of secondary and higher education had argued that the sequestering was needed to ensure that the 1 per cent cess levied on all taxes was channelled only into spending for secondary education. But the finance ministry had pointed out that aggregate spending on the sector was already more than what the cess could raise. Plus, a Parliamentary oversight would plainly help. This was overruled by the Cabinet last week.
This will ensure that the finance ministry will have a little monitoring role in the spending on MUSK from now. The human resource development ministry can also add more areas to what it feels would qualify as secondary or as higher education.
At the same time, the government has made transparent the rationale for Nabard to borrow Rs 9,020 crore from the markets to finance projects under the Accelerated Irrigation Benefits Programme. It is a mega programme expected to irrigate 7.6 million hectares of agricultural land. The states will borrow at 6 per cent from Nabard to finance the projects. To make it possible for Nabard to service the loans, the Centre will provide interest-free funds. It is a large commitment, almost triple the size committed in the previous financial year. But the operational details are minute. The expenditure projects could do with more of the same.