The ministry had permitted ministries and departments to difficulty such ‘Letters of Comfort’ in 2017.
A letter of consolation issued by a ministry basically offers an assurance to the celebration it’s issued saying that the underlying obligation could be met.
Many infrastructure ministries such because the Railways had been utilizing these letters regardless that the instrument itself doesn’t have authorized sanctity.
“As a measure of fiscal transparency and accountable debt management it’s important to have one instrument and that instrument is authorities ensures,” a senior authorities official aware of the event, informed ET.
The federal government discloses authorities ensures in its fiscal assertion, whereas there isn’t any evaluation or accounting of ‘Letters of Consolation’ issued.
Whereas the doc doesn’t have authorized sanctity, a division or ministry not honouring a letter of consolation wouldn’t mirror effectively with the federal government, it’s felt.
Additionally, as a result of there isn’t any central report or accounting of such a letter of consolation, there could also be indiscriminate use of the instrument and critical devolution of legal responsibility on the federal government in some circumstances.
The finance ministry has issued an workplace memorandum to this impact.
“…the authority to difficulty letters of consolation by ministries/ departments/ any entity of GOI stands withdrawn with rapid impact. Henceforth, no letters of consolation shall be issued by any entity throughout the authorities,” the OM acknowledged.
The finance ministry will now perform an in depth evaluation of such letters issued by numerous ministries and departments to evaluate the scenario.
Beneath the provisions of the fiscal duty regulation, the annual finances now offers particulars of the ensures given by the federal government. On the finish of FY21, such ensures added as much as about ₹5 lakh crore.
Author
