Economy

Govt’s FY21 borrowings up, but 44 ministries spent less than allocation; only 10 expended more

Shishir Sinha New Delhi | Updated on December 04, 2020 Published on December 04, 2020

Cheap borrowings are a mixed bag designer491

Government borrowings may get cheaper /iStockphoto Muralinath

The Centre’s borrowing so far in FY21, at ₹9-lakh crore as on November 20, has been 68 per cent higher than in the same period last fiscal year. Though the Finance Ministry views this positively, as a means for higher public expenditure, data show that just 10 ministries and departments were able to spend a higher share of the allocation, while 44 spent less.

According to the Finance Ministry, as on November 20, the Central government’s gross market borrowings touched ₹9.05-lakh crore, against the enhanced target of ₹12-lakh crore for the full fiscal year.

“During almost nine months of pandemic-depressed growth and revenues, a significant scale-up of borrowings is ample demonstration of the government’s commitment to provide sustained fiscal stimulus through maintaining high public expenditure levels in the economy,” a Finance Ministry report said.

However, the ministry-wise expenditure figures during the April-October period paint a different picture — most Central ministries/departments have spent far less this year. Data presented by the Controller-General of Accounts show that the Education Ministry (earlier known as the Human Resources Development Ministry), with a budget of around ₹1-lakh crore, has spent just 36 per cent of it so far. During the corresponding period of last fiscal, it had spent 56 per cent of the BE (Budget Estimate).

The Defence Ministry got ₹4.71-lakh crore but managed to spend only ₹2.65-lakh crore — 56 per cent of the BE against 69 per cent in the previous-year period.

 

Expenditure cap

Finance Ministry officials said one reason for the ministries/departments spending less could be the cash management system, where expenditure is capped. For this, all ministries and departments are clubbed into three categories based on demands/appropriations approved in the Budget. For the first category (Agriculture, Health and Family Welfare, Pharmaceuticals, Consumer Affairs, Food and Public Distribution, Civil Aviation, Fertiliser, Defence and 10 others) there is no cap.

For the second category (Posts, Defence Pension, transfer to Union Territories, Oil and Road Transport and Highways, and 16 others) the quarterly limit was set at 20 per cent with a monthly limit of 8 per cent, 6 per cent and 6 per cent. For the final category, comprising 52 ministries/departments, the expenditure cap was 15 per cent for a quarter and 5 per cent for a month.

“Since this cap is applicable for the first three quarters, expenditure was affected,” the official said. He added that now the cap has been relaxed, and expenditure is expected to improve.

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Published on December 04, 2020
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