Plans well made, well put to use can stop waste of funds

BUDGETARY allocation is made in June, for the 64 ministries and divisions, meant for the implementation of projects to begin in July. But more than a half of the allocation is spent in the last quarter of a financial year, which almost always results in financial indiscipline that causes the waste of funds and creates the scope for corruption. A sluggish spending in initial stages of projects and a hurried spending towards the end of the financial year, mainly caused by improper planning by ministries and divisions, have caused such financial indiscipline for years. City utility agencies, which routinely begin their development work in the last quarter of the financial year, is a case in point, as evident in the agencies now having dug most of the major roads of the capital city, hampering traffic and causing inconveniences to city residents. The Finance Division’s recent directive for the ministries and divisions aimed at a prudent fund management, as New Age reported on Wednesday, is, therefore, welcome. The number of revised project, citing fresh components and other such reasons that are typically reflective of flawed planning, has increased to 326 in the 2022 financial year, from 285 in the 2021 financial year, accounting for about 24.1 per cent of investment projects.

A sluggish initial spending, followed by a hurried spending towards the end of financial years and project revisions, caused by poor planning, flawed feasibility studies and delayed implementation, result in time and cost overrun, stopping the economic benefits meant out of the projects from reaching the intended groups at intended time. It is generally said that the misuse of funds and corruption, keeping to a statement of the finance minister of the day in 2015, eat up more than 2–3 per cent of the gross domestic product. With the number of revised projects having significantly grown, this is highly likely to cause more waste of funds and create further scopes for corruption. The Finance Division directive, issued in the past week, has, therefore, asked the ministries and divisions to prepare their annual outlay plans in consultation with Finance Division officials so that the bad practice of flawed planning,  delayed implementation and a hurried financial year-end spending — noticed to have significantly grown in the past three financial years — could be stopped. A spending spree towards the end of the financial year also strains the Finance Division in that the agency is forced to borrow money from the market at high interest rates as the demand for money from the ministries and divisions goes up.

The Finance Division, therefore, talks about a sustained oversight on the annual spending of the ministries and divisions to ensure a better fund use with the introduction of a scoring system for performance evaluation. The Finance Division is also mulling over rewards for agencies showing good fund use. There should also be punishment for agencies coming up with bad fund use for the system to function well. What the Finance Divisions should, above all else, ensure is that plans are well made, without any flaws in feasibility, and well implemented, without delay or hurry in spending.