Print Friendly, PDF & Email

Government Proposes Hike in Ministries’ Financial Reporting Limits

Facts for Prelims (FFP)


Source: IE

 Context: Parliament’s Public Accounts Committee (PAC) has approved the Finance Ministry’s proposal to raise reporting limits for new policy-related expenditures by ministries/departments.


What does the new reporting limit mean?

The new reporting limit dictates the amount of spending that requires prior approval or oversight from Parliament or other relevant authorities.


The new limits are set above Rs 50 crore but not exceeding Rs 100 crore, with mandatory prior approval of Parliament for spending over Rs 100 crore. The move comes after nearly 18 years and is in line with GDP growth and budget size expansion. The revision also covers New Service (NS) and New Instrument of Service (NIS) expenditure, aiming to encourage better budget estimation by ministries.


Aim: This revision aims to reduce delays in project execution caused by frequent supplementary demands for grants. The proposed changes are expected to streamline the spending process and improve decision-making while ensuring parliamentary oversight.


About NS and NIS:

CategoryNew Service (NS)New Instrument of Service (NIS)
DefinitionExpenditure arising from a new policy decision not previously brought to Parliament.Relatively large expenditure for expanding an existing policy.
PurposeIncludes new activities or investments.Involves significant expansion of an existing policy.
Amendments’ ObjectiveEncourage ministries to better estimate budgetary needs.Address a surge in supplementary proposals, reducing delays in project execution.


About PAC:

Public Accounts Committee (PAC)
EstablishmentIntroduced in 1921 under the Government of India Act, 1919 (Montford Reforms), existing in the Indian Constitution since then.
PurposeExercise’s oversight of public expenditure scrutinizes the value for money of government projects, programs, and service delivery, and holds government officials accountable for public spending.
ResponsibilitiesExamines annual audit reports of CAG, including appropriation accounts, finance accounts, and public undertakings.
CompositionComprises 22 members from the Indian Parliament, with 15 elected from Lok Sabha (Lower House) and 7 from Rajya Sabha (Upper House).
AccountabilityHolds government and civil servants accountable for economy, efficiency, and effectiveness of public spending.