Relevance: GS II (Governance) & GS III (Economy) | Source: The Hindu
1. What is the News?
A Parliamentary panel has strictly criticized the Ministry of Planning and NITI Aayog for poor financial management and poor planning of public funds.
2. The Core Issues
Blocked Funds: The Ministry spent only ~35% of its allotted money in recent years. Yet, it keeps demanding a 20% budget increase annually. This “idles” funds that could have been used to build schools or hospitals.
The “March Rush”: Government money expires on March 31st. To avoid returning unspent money, the Ministry rushed to spend it carelessly in the final months. This breaks the Finance Ministry’s strict rule against end-of-year panic spending.
3. Know Your Institutions
NITI Aayog vs. Planning Commission: The old Planning Commission had the massive power to directly allocate funds to states. NITI Aayog does not. It is an advisory ‘Think Tank’ and relies entirely on the Ministry of Planning for its own funds.
Standing Committees (The Watchdogs): These are groups of MPs who deeply check the budget demands of various ministries before the Parliament actually votes to approve them.
The “UPSC Trap”
The “NITI Aayog” Trap: UPSC often claims NITI Aayog is a statutory body with an independent budget. Incorrect. It is an executive body (created by a cabinet resolution, not a law) and its budget is routed through the Ministry of Planning.
The “Committee Power” Trap: Parliamentary Committees can only recommend and scrutinize. They cannot directly cut a ministry’s budget—only the Lok Sabha has the power to do that through voting.
UPSC Value Box
| Key Concept | Simple Meaning |
|---|---|
| Rule of Lapse | A financial rule stating that any government money not spent by March 31st expires and returns to the Consolidated Fund of India. |
| DRSCs | Departmentally-Related Standing Committees. The official name for the MP groups that scrutinize ministry budgets. |
Q. With reference to government budgeting and institutional frameworks in India, consider the following statements:
Unlike the erstwhile Planning Commission, NITI Aayog does not have the power to allocate financial resources to states.
The ‘Rule of Lapse’ mandates that all unspent funds at the end of the financial year must be returned to the Consolidated Fund of India.
Departmentally-Related Standing Committees (DRSCs) scrutinize the budget demands of various ministries.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Correct Answer: (d)
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