Finmin relaxes expenditure cap for Jan-March quarter but within Revised Estimates

Shishir Sinha | Updated on: Jan 20, 2022

NEW DELHI, 01/02/2021: The scene Ministry of Finance, at North Block in New Delhi on Monday. February 1, 2021. Photo: SHIV KUMAR PUSHPAKAR / The Hindu | Photo Credit: SHIV KUMAR PUSHPAKAR

March cap for capital expenditure also relaxed

Finance Ministry has relaxed norms for spending during January-March quarter (Q4) of the current fiscal, so as to boost spending, but within the limit of Revised Estimates (RE).

BusinessLine, on January 16, had reported that a number of Central Ministries and Departments had approached the Finance Ministry for relaxing expenditure limit related to Q4 for higher capital expenditure. Cash Management System in Central Government – Modified Exchequer Control Based Expenditure Management, dated August 21, 2017, says: “Not more than 33 per cent and 15 per cent of Budget Estimates (BE) shall be permissible respectively in the last quarter and last month of the financial year. The restrictions shall be observed both scheme wise as well as for Demand for Grants as a whole.” This has been changed for the current fiscal.

Now, the Economic Affairs Department, in its Office Memorandum (OM) dated January 19, decided to relax the upper limit of 33 per cent of BE as applicable for last quarter of the current financial year as a one-time measure, subject to the condition that ceiling of RE 2021-22 is not exceeded. “For the items of capital expenditure, ceiling of 15 per cent of BE in the last month for this fiscal also relaxed, provided the capital/overall expenditure is within the RE 2021-22 ceiling,” it said while adding that relaxation will be applicable with immediate effect.

Meeting capex target

The Budget for FY22 provided ₹5.54 lakh crore for capital expenditure which is 34.5 per cent more than the Budget Estimate (BE) of FY21. Data from Controller General of Accounts (CGA) showed 55 Central Ministries/Departments with 101 Demands for Grants showed capital expenditure in April-November period (first 8 months of the current fiscal) has been around ₹2.74 lakh crore which is 49.4 per cent of BE (vs 58.5 per cent in FY21). This means the government will have to spend the remaining 50.6 per cent in the last four months of the current fiscal.

Though, government officials say this is not impossible, it is possible only after relaxation in quarterly and monthly expenditure limit. As the Office Memorandum (OM) made it clear that any deviation from Monthly Expenditure Plan (MEP) and Quarterly Expenditure Plan (QEP) will not be permitted without prior approval from Budget Division and Expenditure Secretary respectively, number of Ministries/Departments sought relaxation.

Though, as shown in CGA data, number of Ministries/Departments have reported lower capital spending in April-November period and prominent among them is Defence (Capital Outlay on Defence Services), Department of Economic Affairs or Ministry of Power, key infrastructure Ministries such as Road Transport and Highways (68 per cent of BE) Railway (61 per cent) or strategic one such as Department of Atomic Energy (60 per cent) are showing good progress.

Published on January 20, 2022
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