Chief Minister Jagadish Shettar on Saturday said that managing public money had become a major challenge in recent years.

Inaugurating the new structure of the Fiscal Policy Institute (FPI) near Kengeri, he said that unpredictable financial trends might lead to changes in revenue and tax collection. Economic reforms, ushered two decades ago, had posed various challenges to governments, especially in fiscal governance, he observed.

In the changed economic scenario, fiscal governance demanded new skills for effective implementation of programmes and FPI would support the government in providing training to officials of the Finance Department, he said.

He sought support of the institute for creating a strong base for effective functioning of departments dealing with finances.

Karnataka was the first to enact the Fiscal Responsibility Act (KEFRA) in 2002. The new building which is spread over an area of five acres has been built at a cost of Rs.33 crore.

Presiding over the function Union Minister for Minority Affairs K. Rahman Khan called for more efficient and transparent management of public funds.

“The country has lost a lot of public funds due to bad fiscal management,” he observed.

When resources were scarce, governments would be forced to collect more taxes. The public expect better management of the taxes collected from them. But there was something wrong with the way public funds were being handled. Due to bad fiscal management, the cost of some of the important projects was escalating, he noted.

Citing the example of the Kankan Railway Project, Mr. Khan said the original cost was Rs. 800 crore for three years, but owing to the delay in implementing it, the cost swelled to Rs. 4,000 crore. He said there was an urgent need to overhaul the Indian accounting system and the principles followed in government offices to bring in more efficiency and transparency.

FPI Director P.R. Devi Prasad spoke.

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