The ministry has also introduced individual accountability for financial advisors on expenditure, forced subsidy payments to be made net of amounts owed by PSUs, and passed a stricture against the often-repeated practice of departments to account for expenditure incurred in financial statements of subsequent years.

The ministry, in a recent circular issued to all PSUs, has said: "Financial advisors will be directly accountable for deviations of expenditure from the prescribed ceilings without prior authorisation. Unauthorised expenditure over and above the budgetary appropriation should be dealt with severely and accountability fixed."

The circular adds, "in view of the severe constraint on resources, it would notbe possible to provide additional funds to any ministry or department at the revised estimate stage, unless additional allocations have been agreed to by this department for exceptional reasons."

It has been made clear to the PSUs that "the practice of incurring or committing expenditure in a particular year and postponing the actual payment of bills to the subsequent financial year is highly improper and needs to be stopped forthwith". The secretaries to the centre and financial advisors have been directed to ensure that no fresh financial commitments are made on items which are not provided for in the budget approved by parliament.

The finance ministry has also laid down guidelines for release of funds to PSUs to check expenditure. (A circular issued by the additional secretary (budget) on January 28, 1997, had advised all financial advisors of public-sector enterprises (PSEs) to regulate the expenditure flow).

The circular further states that, "Key issues of implementation and execution of variousschemes should be oriented towards achieving the end objective, rather than merely incurring of expenditure to avoid savings and surrenders."

The ministry has stated that the practice of issuing cheques for net sums of money, as in adjusting repayment of loan against the subsidy of any other payment due to an autonomous body or PSU, should be strictly followed. Cases have been cited of ministries releasing funds to autonomous bodies year after year when substantial balances with them are unused and kept in bank deposits.

"The ministries are aware that release of funds for ongoing projects should be based on actual utilisation of funds already provided, and the absorptive capacity of the recipient state and organisation. There are details procedures laid down in this regard, and such procedures should be complied with strictly," states the circular.

The circular has proposed introducing austerity measures and exercising greater fiscal prudence among PSUs so that they show better performances. They havebeen asked to pay a minimum dividend of 20 per cent on government shareholding.

The minimum benchmark for the dividend has been set to ensure that the enterprise yields a reasonable return on the capital employed. According to the circular, if the level of 20 per cent dividend is not achieved with regard to the disposable profits, the PSUs must ensure that the dividend payout constitutes at least 20 per cent of the post-tax profit.

In case of oil, petroleum, chemical and other infrastructure industries, the minimum dividend payout is 30 per cent of post-tax profits. The note observes that in many cases, this dividend payout has not been met despite the directives to achieve the same by the ministry.

The ministry has reiterated that the administrative ministries and departments must ensure compliance with regard to the stipulation for a minimum dividend payment, and also for issue of bonus shares in cases where the capital base of the PSUs is found to be narrow.

The circular has emphasised that someother areas that need monitoring include timely repayment of loans provided by the government, and payment of fees and charges on government guarantees. Regarding manpower, the finance ministry has decided not to provide any rise in budgetary allocations for pay and allowances from the next financial year except to the extent of implementing the accepted recommendations of the fifth pay commission.

The circular states that most financial estimates of manpower are based on past norms and yardsticks which have ceased to be relevant. "These norms do not take into account the far-reaching changes in information technology, use of better communication systems and other improved facilities," it adds.

Expenditure on pay and allowances (excluding defence personnel) has more than doubled during the last few years from Rs 9,838 crore in 1991-92 to an estimated level of Rs 23,773 crore in 1997-98.

"The rate of growth of expenditure on this account is neither desirable nor sustainable," states the circular, whiledeclaring that the lowest level of vacant posts should be abolished to the maximum extent possible.