According to the Transaction of Business Rules, creation of a new company, autonomous body, institution, university or special purpose vehicle, along with senior posts, needs to be put up for approval before the Cabinet.
This is necessary to ensure parastatal bodies do not multiply and establishment liabilities of the government do not increase at the cost of other desirable expenditure, the ministry said while announcing constitution of the six-member Committee on Establishment Expenditure (CEE) headed by the expenditure secretary for appraisal of such proposals. CEE will examine the need for creation of the new body and whether the stated policy objectives can be achieved by restructuring an existing body or expanding the scope of an attached or sub-ordinate office. It will also appraise the number of posts that need to be created in the new body, recurring expenditure for 10 years and to what extent the recurring expenditure can be borne from internal resources, thereby minimising the budgetary burden on the government.
After appraisal, creation of the new body will be placed before the Cabinet for approval while the scheme or the project may be dealt with in accordance with prevailing guidelines, it said. "... no pre-investment activity related to creation of a new body or institution will be approved without in-principle approval of the Department of Expenditure unless there is a specific budget announcement to that effect," the ministry added.
Consequent upon the announcement in the Budget to do away with the the Plan/non-Plan distinction at the end of the 12th Five-Year Plan, the Department of Expenditure has issued revised guidelines for formulation, appraisal and approval of public funded schemes and projects.