Scope of Public Expenditure Management in India

Scope of Public Expenditure Management in India

Tags:      Gig Economy     Economy     WTO     WTO Public Stockholding     MSP     Economic Growth     Masala Bond     Environmental Performance Index     Forecast of Economic Growth     Functions of the Finance Commission

Public expenditure management (PEM) is a strategy for judicious use of financial resources available to the government in order to achieve good governance. It is primarily concerned with general budgetary restraint, resource allocation, operational effectiveness, and macroeconomic stability. Frequently, the macroeconomic sum known as Gross Fixed Capital Formation is referred to as "investment" (GFCF). It refers to the acquisition of brand-new or used fixed assets for use over the course of more than a year in the production of other products and services. The World Bank calculates inventory changes and monitors changes in gross capital creation. The cost of the plant, machinery, buildings, and infrastructure is taken into consideration by the GFCF. The most important component of a manufacturing process are the assets that are produced as a result.

For instance, a capital formation investment in agriculture boosts the productivity of the stock of machinery, tools, and resources, enabling farmers to use their resources, particularly labour and land, more efficiently. Therefore, public expenditure management is a crucial component of sound governance. Governments should ensure that the Integrated Financial Management Information System (IFMIS) in use provides the fiscal discipline, accountability, and results necessary for long-term sustainable growth given the significance of public expenditure management.

Public expenditure management advantages

• Better resource allocation

• Increased openness and efficiency in government spending

• Improved fiscal responsibility and accountability

• Improved public service delivery

• The ability to battle corruption in government procurement, which is one of the biggest drains over the fiscus or, public funds in some countries may be the most crucial of all.

By establishing financial discipline for both small- and large-scale government acquisitions, the Public Expenditures Management (PEM) pillar supports governments. It provides assistance with contract and spend management, eProcurement, and tendering. The pillar also includes requisitions, purchase orders, goods receipt, goods return, costs, and payment vouchers, which are all essential components of the government's purchase and commitment cycle. PEM promotes trust in government by providing transparency regarding the procurement procedure, suppliers, pricing, and terms. To manage all facets of contract payment accounting, it also provides payment features. And finally, PEM makes it possible to start payment procedures and manage collecting of expenditure vouchers from any source.

Governments use Government Resource Planning (GRP) systems as accounting and reporting tools. They aid in ensuring accountability and openness in the use of public monies and deter corruption. This guarantees that the taxpayers receive the most value for their money. Governments can better serve the needs of their residents by enhancingthe Public Expenditures Management (PEM).