Cash management guidelines (CMG) for the quarter beginning July 1 is unlikely to see any change, a senior government official said. This means relaxed norms will continue to be applicable for capital expenditure and expenditure under Centrally Sponsored Scheme (CSS).  

These two account for nearly 41 per cent of total budget size in FY24. The Union Budget for FY24 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 Similarly, for 58 CSS , ₹4.76 lakh crore have been provided.

Relaxation in expenditure is critical, given the expenditure push required from the government. In the first month of the fiscal, the Centre spent nearly 7 per cent of total budget allocation with capital expenditure recording 10 per cent of overall allocation.  

Considering the revenue situation, the Economic Affairs Department issues guidelines for  “Cash management system in Central Government-Modified Exchequer Control Based Expenditure Management,” before the beginning of each quarter to set the framework for expenditure in next three months. Normally, Central Ministries and Departments are required to make monthly or quarterly expenditure plans, and 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), the cap is 33 per cent. These limits are keeping in mind the cash flow and even spreading of expenditure in 12 months.

Relaxing stipulations

For the first quarter (April-June) of FY24, the Finance Ministry relaxed norms under cash management guidelines for capital expenditure and expenditure under CSS. It was decided to relax stipulations (prescribed in OM issued in May last year) applicable for big releases of ₹500 crore or more.

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The OM, issued last May, 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 of 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.

Separate advisory

It also clarified 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 added.

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.

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