The Finance Ministry has relaxed norms under cash management guidelines for capital expenditure and expenditure under Central Sector Schemes for Q1 FY24. This shows revenue collection is good, while there is need to boost capital expenditure.
An office memorandum (OM), issued by the Economic Affairs Department in the Finance Ministry, said: “To provide fillip to capital expenditure including Grants-in-Aid for creation of capital assets and expenditure under Centrally Sponsored Schemes (CSS), it has been decided for these items of expenditure to relax stipulations (prescribed in OM issued in last May) applicable for big releases of ₹500 crore or more.”
The OM, issued last May, had said that Ministries need to prepare calendar of releases of amounts between ₹500 crore and ₹2,000 crore. The date of range should be 21st to 25th of a month as GST is deposited after 20th every month. For expenditure of ₹500 crore or more, prior approval with two working days’ notice, shall be taken from the Budget Division. In case of single payment of ₹5,000 crore, prior permission from the Budget Division is a prerequisite. The same will be applicable for autonomous bodies under Treasury Single Account.
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Budget allocation
FY24 Budget has provided ₹10-lakh crore for capital expenditure and ₹3.7-lakh crore for Grants-in-Aid for creation of capital assets taking the effective total of ₹13.7-lakh crore as against ₹10.5-lakh crore in FY23. The Budget has listed 722 Central Sector Schemes (CS) with a total allocation of ₹14.68-lakh crore. Such schemes have 100 per cent funding from Central government. Some of the prominent CSS include Pradhan Mantri Kisan Samaan Nidhi, Food Subsidy, Fertilizer subsidy etc.
As per the spending guidelines, ministries and departments are required to make monthly or quarterly expenditure plans and normally they are permitted to spend up to 25 per cent of Budget Estimates in each of the first three quarters (April-June, July-September and October-December). For the fourth quarter (January-March), cap is 33 per cent. These limits are keeping in mind cash flow and even spreading of expenditure in 12 months.
Relaxation in stipulations
Latest OM makes it clear that relaxation in stipulations for April is implemented with immediate effect. “For subsequent quarters, separate advisory will be issued before commencement of the quarter. Further, the relaxation will be subjected to strict adherence to the SNA/CNA guidelines issued by Department of Expenditure,” it said.
SNA means Single Nodal Agency and CAN is Central Nodal Agency and these are used for fund disbursement. The OM also asked Financial Advisors to monitor the releases to ensure that there is no idle parking of funds at any level and the funds are released on just-in-time basis. It also said that apart from relaxations mentioned, any other deviation will require approval from the Finance Ministry.