The finance ministry would not release fresh funds to autonomous bodies or non-government organisations (NGOs) unless the agencies certify that the money given to them was used.
“It has been decided that grants-in-aid should not be released to any autonomous body or NGO or any other organisation/institution (other than state governments) if it has not submitted all utilisation certificates due to rendition, for grants-in-aid released by the Central government in respect of all its schemes,” Finance and Expenditure Secretary R S Gujral said in an office memorandum.
The directive would come into force with immediate effect and any deviation would require finance ministry approval.
The issue of discipline in fiscal transfers to autonomous bodies at Central, state and local levels has been discussed in pre-Budget meetings held in the ministry of finance with government departments.
The move comes in the wake of the government trying to contain the fiscal deficit.
The finance ministry has already increased the fiscal deficit target for 2012-13 to 5.3 per cent of the GDP from 5.1 per cent estimated in the Budget.
Kelkar panel had cautioned that fiscal deficit could touch 6.1 per cent of GDP if no measures were taken by the government.
Fiscal deficit was 5.8 per cent in 2011-12 while economic growth slipped to nine-year low of 6.5 per cent. The economic growth is expected to fall further this year. Earlier this month, Standard & Poor’s had warned that India had one-in-three chance of a downgrade to junk.
The finance ministry is working out a fiscal reduction plan that involves cutting expenditure, utilising savings from social sector schemes, keeping supplementary demands to the bare minimum, rationalising subsidies and shifting some of the last quarter liability to next financial year.