Ministries allowed to spend 33% of BE in January-March quarter

Shishir Sinha New Delhi | Updated on January 06, 2021

The key Ministries and Departments include commerce, telecom, coal, environment, mines and MSMEs.   -

FinMin, however, says that the spending should remain within the revised estimate

The Finance Ministry has restored quarterly and monthly expenditure limit as prescribed in 2017 for the last three months — January-March of FY20-21. This means higher expenditure by various Central Ministries and Departments would be possible during the fourth quarter of the fiscal.

However, the change in stance has come with a caution. It says expenditure incurred during the remaining period of current fiscal “should remain within the ceiling of Revised Estimate of FY20-21.”

“Instruction has been issued to various Central Government Ministries and Department to follow expenditure guidelines during the current quarter (January-March) and last month of the fiscal (March) as prescribed by the August 2017 office memorandum,” a senior Government official said.

As per Controller General of Accounts (CGA) data, the total expenditure during April-November was 62.7 per cent of Budget Estimate as against 66.3 per cent during the corresponding period of FY19-20

August 2017 office memorandum says, “Not more than 33 per cent and 15 per cent of expenditure of Budget Estimate shall be permissible, respectively, in the last quarter and last month of the financial year.”

In December 2019, this memorandum saw a change when the Finance Ministry said that expenditure during the last quarter would be 25 per cent of the Budget Estimate against 33 per cent. For March, the ceiling would be 10 per cent of the Budget Estimate against 15 per cent.

The change for FY19-20 was brought, keeping in mind the fiscal situation during that year. Even during the current fiscal, given the cash crunch, the Ministry issued expenditure-control measures in April. Accordingly, all Central Ministries and Departments were placed under three categories based on demands/appropriations approved in the Budget.

The ‘A’ category had demands/appropriations related to agriculture, health and family welfare, pharmaceuticals, consumer affairs, food and public distribution, civil aviation, transfer to States and interest payments, beside nine others. Fertiliser and Defence will fall in this category. There will be no monthly or quarterly capping.

The ‘B’ category covered demands/appropriations for posts, Defence pension, transfer to Union Territories, oil and road transport and highways, besides 16 other Ministries and Departments. Here, the quarterly limit would be 20 per cent of the BE. Also, the monthly limit for October would be 8 per cent, and 6 per cent each for November and December, respectively.

Revised guidelines

The ‘C’ category had 52 items. The revised guidelines stipulate 15 per cent limit for the quarter and 5 per cent for each of the three months. The key Ministries and Departments include commerce, telecom, coal, environment, mines and MSMEs.

These norms were followed for July-September, while some changes were made for October-December quarter, when Defence and fertiliser were brought into the first category. However, on October 29, the Finance Ministry issued an office Memorandum doing away with the restrictions. Clear instructions were issued that expenditure would be strictly monitored during remaining period of current fiscal.

The official said, with improved tax collection and keeping in mind the need for more public expenditure, Central Ministries and Departments will be encouraged to spend, but within the limit of RE, which will be indicated in the Budget for FY 2021-22.

Published on January 06, 2021

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