Manipur government announces “austerity” measures. Too little too late?

Manipur government announces “austerity” measures. Too little too late?

Manipur government has finally started feeling the pinch of economic slowdown due COVID-19 pandemic. It has forced the government to cut down on non-essential expenditure in order to ensure that resources are utilize for meeting unavoidable and committed expenditures of the state. 

Dr Rajesh
File photo: Chief Secretary(In-charge) Dr Rajesh Kumar

State Chief Secretary who holds the Finance department issued the order to control the expenses.

COVID-19 Cess collection

Nagaland has collected a sum of INR 13.14 Crore through COVID-19 cess. COVID-19 cess of INR 5 per litre of diesel and INR 6 per litre was levied in Nagaland from April 28. Nagaland government recently stopped the cess. Manipur also levied COVID-19 cess on fuel sales but the actual amount collected out of the cess is not known

Open Market Borrowing and Expenses

The Centre late last month gave two options to the states to borrow either Rs 97,000 crore from a special window facilitated by the RBI or Rs 2.35 lakh crore from market and has also proposed extending the compensation cess levied on luxury, demerit and sin goods beyond 2022 to repay the borrowing. Of the 13 states, 12 have preferred to opt for borrowing from the special window facilitated by the RBI. These states are AP, Bihar, Gujarat, Haryana, Karnataka, Madhya Pradesh, Meghalaya, Sikkim,Tripura, UP, Uttarakhand and Odisha.

Only Manipur has opted for borrowing entire shortfall from the market in one go. Manipur is believed to have exhausted its open marketing limit in Q1 (first quarter) . The general practice is to utilized the borrowing limit in staggered/phase borrowing approach to reduce the interest liability spread across different quarters.

The open market borrowing of 3.2 Lakh cr was allowed by the Finance Ministry in the first week April, 2020 till December 2020. The move came after several states demand for higher funds to meet the COVID-19 expenses.

Austerity

Manipur Government austerity measures have come five days after the state halted all ongoing recruitment process citing the poor economy.

Recruitment Ban

Less earning and High expenses: Lethal combo?

While the austerity drive seems to be for common employees and name sake several glaring expenses are being incurred in recent times:

  • State government have procured several brand new luxury cars this fiscal year even when economic crisis was looming large in the country. Sources indicates that these cars were meant for senior bureaucrats.
  • Transport department which is one of the key revenue generation department stopped generating revenue. Entire staff was utilized in managing the movement of trucks for essential commodities during the lockdown. The department literally stop new vehicle registration from March 2020 onwards thus leading to revenue leakage.
  • State government have also utilised the service of charter flights at the cost of state ex-chequer?
  • How will state government source the funds for different projects?

Office memorandum issued from the finance department says, “the amount to be incurred on meeting recurring expenditure is likely to see an increase during the current fiscal due to certain commitments made by the government, including unavoidable expenditure on COVID-19 related activities.”

  1. As economy measures, the government has, with immediate effect, cut down on as many as 14 categories of non-essential expenditure including excess authorisation over budget provision, commitments on expenditure, ban on recruitment, ban on creation of new entities, ban on printing of diaries, coffee table book, purchase of office furniture/equipments and luxury items among others. 
  2. “No further excess authorisation over the budget provision shall be considered, except for central share of CSS and CPS and other central grants for which funds have been received, and for salary and pension related payments,” it said.
  3. It directed that no financial commitments shall be made by any department on items for which expenditure sanction has not been obtained. Besides, all major tax and non-tax revenue collecting departments were asked to take urgent necessary measures to meet their targets for the current fiscal year, 2020-21.
  4. Ban on recruitment, on direct, part-time, contract, ad-hoc, substitute and casual basis, shall continue and there shall be no further creation of posts and filling up of vacant posts, except by promotion. 
  5. All on-going recruitment processes should be put on hold except those already started with the approval of the cabinet, it reiterated.
  6. It has also put a ban on creation of new entities and said that no new entities involving expenditure out of the consolidated fund of the state will be created. 
  7. It further said that utmost economy shall be observed in organising conferences/seminars/workshops/exhibitions/fairs among others and only such events, which are absolutely essential should be held. “Holding of or participating in exhibitions/seminars/workshops abroad at the cost of the state government is prohibited,” it added. 
  8. The government has also banned purchase of new vehicles with immediate effect while complete ban has been put on printing of diaries, greeting cards, coffee table books and calendars in physical forms by administrative departments, except those published by DIPR and also on purchase of office furniture/equipment and luxury items without prior approval of the finance department.
  9. “To ensure procedural compliance and to avoid serious audit objections, no procurement related expenditure shall be entertained in the last quarter of the fiscal year,” it said.
  10. The office memorandum also mentioned that the administrative secretary and head of department shall be responsible for ensuring compliance of the measures.
  11. It maintained that the instructions shall apply to all government departments, state public sector undertakings, state level autonomous societies, development authorities and other statutory and non-statutory bodies fully or partly funded by the government.
  12. No exemption to the above measures shall be allowed, except with approval of the finance department,. 

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