The Fiscal Management Review Committee (FMRC), headed by Chief Secretary S.V. Ranganath, has recommended total freeze on fresh recruitment in the State government for the next two years except for critical services, such as health.

The Medium Term Fiscal Plan (MTFP) for 2012–16 of the State government stated that the committee met in December 2011 and March 2012 discussed issues related to overall resource of the State, committed expenditure, fiscal discipline, and adherence of fiscal indicators to Karnataka Fiscal Responsibility Act, among others.

The MTFP said the panel suggested total freezing of recruitment for the next two years, disfavoured new additional grant in aid commitments, putting on hold opening of new institutions, shift from beneficiary orientation to capital investment (5 per cent of the GSDP) for mobilising more resources for power, roads and drinking water, and revision of user fee every alternate year.

It recommended that investment proposals above Rs. 5 crore should be subjected to proper appraisal mechanism. Proposals and infrastructure projects above Rs. 10 crore should be subjected to detailed social cost benefit analysis, the committee said.

It also recommended putting on hold additional funding requirement of departments during the course of the financial year 2012-13 and advised departments to manage their activities within the available budget provision.

The MTFP said panel recommendations “are essentially aimed at increasing the capital expenditure, minimising lower priority revenue expenditure, increasing non-tax revenue and pursuing prudent investment appraisal method.”

The MTFP said efforts of the government to get due returns out of its investments in various entities had not yielded satisfactory results. As on March 2011, the government invested Rs. 38,421 crore in various government companies, boards and corporations. Noting the necessity of weeding out the ineligible and bogus beneficiaries under various subsidy schemes, the MTFP said the Resident Data Hub Scheme and UID scheme would help in better identification of beneficiaries and targeting of subsidies directly.

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