Economy

FinMin says ‘no’ to fresh cash expenditure for first Supplementary Demands for Grants

Our Bureau New Delhi | Updated on June 18, 2020 Published on June 18, 2020

Finance Minister Nirmala Sitharaman at the GST Council meeting in New Delhi on Friday.   -  PTI

‘Re-appropriation of funds to any new scheme by any Ministry/Department will be prohibited’

With the Covid-19 pandemic drying up resources, the Finance Ministry has made it clear that there will not be provision for ‘cash supplementary’ when it seeks approval from Parliament during forthcoming monsoon session.

After the presentation of Budget and during the remaining parts of the financial year, the Finance Ministry moves ‘Supplementary Demands for Grants’ in Parliament. Basically, it comprises proposals related to additional expenditure over and above what is prescribed in the Budget. This additional expenditure is met through two means — net cash outgo or cash supplementary and savings of various Ministries/ Departments or technical supplementary. Cash supplementary requires the government to go for new mean or better use of means.

“Since full Budget is available with Ministries/Departments with effect from April 2020 onwards, cash supplementary should not be proposed in this batch. Such requests shall be summarily rejected,” Economic Affairs Department said in an office memorandum (OM). Since, the government’s revenue has touched new low, it would be almost impossible to provide for any new expenditure.

The memorandum also said that re-appropriation of funds to any new scheme by any Ministry/Department will be prohibited. “Any such proposal will be summarily rejected, except for schemes where specific approval of Department of Expenditure is obtained,” it said. Earlier this month, the Expenditure Department had asked all the Ministries/Department not to use their discretionary power to bring in a new scheme. Under such arrangement, a Ministry or Department can propose scheme with an outlay up to ₹500 crore.

Contingency Fund

There is no other distinct change on OM for Supplementary Demands for Grants. Ministry/Department can propose for cases where advance for the Contingency Fund have been granted, where payment against court degree cannot be postponed, and where Finance Ministry has specifically advised to propose Supplementary Demand in the Monsoon session. “All other cases may be held till review of Budget at RE 2020-21 stage,” according to OM.

Covid-19 pandemic has completely disturbed the fiscal structure. Initial indication can be gauged by report card for April, released by Controller General of Accounts (CGA). It said that total revenue receipts during the month of April was ₹27,548 crore or 1.2 per cent of Budget estimate while total expenditure amounted to over ₹3.07-lakh crore or 10 per cent of Budget estimate. With this, the fiscal deficit already exhausted over one-third of the Budget estimate in the first month of the fiscal year. The government has also decided to borrow over ₹4-lakh crore additionally.

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Published on June 18, 2020
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