Resource crunch: Centre suspends all new schemes till end of fiscal

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

Those related to Aatma Nirbhar Bharat, PM Garib Kalyan exempted

With the pandemic making a deep dent in the government’s coffers, the Finance Ministry has decided to put on hold the initiation of any new scheme for FY21 that has been approved or appraised.

Also, Central ministries and departments have been asked not to make new proposals for schemes or sub schemes except those announced under the Pradhan Mantri Garib Kalyan Yojana and Aatma Nirbhar Bharat Abhiyan.

“In the wake of the Covid-19 pandemic, there is unprecedented demand on the public financial resources and a need to use resources prudently in accordance with emerging and changing priorities,” said the Department of Expenditure (DoE) in an office memorandum dated June 4.

What necessitated the fresh instructions was the slew of new proposals for ‘in-principal’ approval being received from various ministries and departments.

Rising expenditure

The government is facing a huge resource crunch even while expenditure is on the rise. According to the Controller General of Accounts (CGA), total revenue receipts in April stood at ₹27,548 crore, or 1.2 per cent of the Budget estimate, while total expenditure amounted to over ₹3.07-lakh crore, or 10 per cent of the Budget estimate. With this, over one third of the estimated fiscal deficit has already been exhausted in the first month of the fiscal year. The government has decided to borrow over ₹4-lakh crore additionally.

According to the DoE memo, the launch of new schemes already appraised/approved for FY21 will remain suspended for a year till March 31, 2021, or till further orders, whichever is earlier. This is also applicable to schemes for which ‘in-principle’ approval has already been given by the DoE.

“No new proposal for a scheme/sub scheme, whether under delegated powers to the administrative ministry including SFC (Standing Finance Committee) proposal, or through EFC (Expenditure Finance Committee), should be initiated this year except the proposals announced under the Pradhan Mantri Garib Kalyan Yojana or the Aatma Nirbhar Bharat Abhiyan package and any other special package/announcement,” the memo said. ‘In-principle’ approval for any new schemes will also not be given this fiscal, it added.

Ongoing schemes

Ongoing schemes will be implemented under a January order that had prescribed an interim extension till March 31, 2020 or till the recommendations of the 15th Finance Commission come into effect, whichever is earlier. This will be applicable to all the schemes where there is no change in the scope, nature and coverage, and without any additional cost. “It has also been reiterated that continuation of all schemes would be based on an outcome review based on evaluation,” the DoE memo said.

It added that the continuing schemes need to be appraised and approved further for the period FY22 to FY26 after the 15th Finance Commission recommendations are accepted. “This would also be depend upon the evaluation and the outcome review,” it said.

Published on June 04, 2020
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