28. The biggest challenge that we face is the fiscal challenge. The United Front government is committed to bringing the fiscal deficit to below 4% of GDP. This is what the Common Minimum Programme says and this is what I intend to do over a period of time. One plank of the strategy is, of course, to raise more revenues. But without a credible public expenditure management policy, no programme of fiscal deficit reduction will be sustained. I believe that no one is against austerity or efficiency as such. At the same time, I accept the position that sound expenditure management is not a mere technocratic exercise but involves issues of equity, fairness and non-discrimination. In order to work out a reasonable policy in this regard, I propose to appoint a high-level Expenditure Management and Reforms Commission comprising distinguished political leaders, economists and administrators. This Commission will be given four months - and I hope no more- to submit its recommendations on public expenditure management and control as far as the Central government is concerned. The report will be made public immediately so that we can generate an informed public debate on an issue that has a vital bearing on our economic future.
29. I also propose to place before the House a discussion paper on subsidies. The paper will list all the subsidies, visible and hidden, so that there can be an informed debate and a consensus on the overall level of subsidies as a percentage of GDP and their appropriate targeting.
30. In the meantime, I intend to be strict in matters relating to cash management, project portfolio review, adherence to budgetary ceiling and adequacy of returns from public sector enterprises.
31. Hon'ble Members are aware that in September 1994 an agreement was signed between the Central Government and the RBI to phase out the system of ad-hoc treasury bills by 1997- 98. The experience last year and in the current year so far has shown the difficulty of staying below the within-year limit. Nevertheless, I remain convinced that the system of ad-hoc treasury bills must be phased out. However, before this can happen we need to put in place a better expenditure control mechanism. We also need a more transparent method of defining and reporting the true budget deficit, including all forms of monetisation. I shall present concrete proposals in this regard at the time of presentation of next year's budget so that RBI can have greater autonomy in formulating and implementing monetary policy.
