NEW DELHI: As revenue collections remain subdued, the Centre has decided to tighten the leash on expenditure while extending the curb on spending by ministries to the October-December quarter as well
citing “acute cash stress”.“With a view to manage cash flows, it has been decided to retain and continue with the same expenditure management measures, stipulated in Q1 and Q2, for Q3 - October-December of FY21” said a latest notification issued by the department of expenditure.
However, the departments of Defence and Fertilizer have been freed from the quarterly spend cap of 20 per cent on account of tension at border and the upcoming harvest season, respectively. Further, the department of expenditure has also advised the ministries to plan their spendings carefully and on time, as the amount which is lying unspent will not be automatically carried forward, unlike other years.
“Amounts unspent in a month/quarter will not be automatically carried forward. Ministries/departments are to take utmost care not to bunch up expenditure/releases. In this time of acute cash stress, utmost care may be taken to avoid releases that contribute to idle parking of funds,” the circular noted. The government had announced the curb in the beginning of this financial year keeping in view the financial stress, which further worsened due to the Covid-19. The ministries were kept in three groups — A, B and C — based on the curb on their expenditure.
For instance, ministries in C group included MSMEs, Commerce, Coal, Commerce, Telecom, Environment who were allowed to spend only 15 per cent of their budget allocation in a quarter, while B-category ministries like Petroleum, Highways were were allowed to spend 20 per cent of the allocation. Key ministries like Agriculture, Health, Public Distribution, transfer to states belonged to A category with no checks. The move comes at a time when the revenue collection is far below the target set by the budget. Similarly, the lockdown has also adversely impacted the divestment plan of the government.