Economy

FinMin loosens purse strings for ongoing quarter, last month of fiscal

Our Bureau New Delhi | Updated on February 17, 2021

However, expenditure needs to be within limit fixed under Revised Estimate

The Finance Ministry has eased expenditure norms for January-March quarter and for the month of March. This means the Central Ministries/Departments can spend more but within the ceiling prescribed under the Revised Estimate (RE) for FY21.

“It is to state that QEP (Quarterly Expenditure Plan) for the remaining part of the current fiscal may be considered as relaxed to the extent of expenditure ceiling finalised for RE 2020-21,” an office memorandum (OM) dated February 17 and issued by Department of Economic Affairs said.

RE for FY21 has been fixed at over ₹34.50 lakh crore against BE of ₹30.42 lakh crore. However, out of 101 grants related with Central Ministries and Departments, 67 saw a cut in the RE. So, overall, these will spend less during the current fiscal despite relaxation. However, Ministries/Departments such as Health, Defence and Fertilisers can spend more.

The memorandum also mentioned, “Ministries/Departments during the last quarter/month of the current fiscal year under Cash Management Guidelines have to abide by the instruction contained in the OM dated August 21, 2017 while making large releases.” This means Central Ministries/Departments can spend 33 per cent of BE in three-month period of 15 per cent in the last month, that is March.

Lowered limits

This clarification is required as the government had lowered quarterly and monthly limits during FY20 when these were brought down to 25 and 10 per cent respectively.

After the pandemic gripped the economy, the government, as part of a cash management plan, clubbed all the Central Ministries/Departments into three categories based on priority. There was no restriction on the first group in terms of quarterly and monthly expenditure during April-June quarter (Q1) and July- September quarter (Q2) and half of October-December quarter (Q3). However for these periods, monthly and quarterly expenditure limit of the second group was fixed at 8-6-4 per cent (first month of quarter, second month of quarter and third month of quarter) and 20 per cent respectively.

For the third group, quarterly limit was set at 15 per cent while monthly limit for each of three months in a quarter was set at 5 per cent each.

Revenue position improves

After an improvement in revenue position, the government lifted the cap in mid-October and allowed Central Ministries/Departments to spend according to the budget plan. This has resulted in the improvement of expenditure.

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Published on February 17, 2021
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