As COVID-19 second wave once again threatens economy, Centre to continue austerity drive

Officials say that while the government is more prepared than last year, the second wave is worse than anticipated.
Finance Minister Nirmala Sitharaman being checked at the Finance Ministry entrance. (Photo | EPS/Parveen Negi)
Finance Minister Nirmala Sitharaman being checked at the Finance Ministry entrance. (Photo | EPS/Parveen Negi)

NEW DELHI:  As the second Covid-19 wave threatens to derail the economy, the Government is likely to continue with its austerity drive until the end of the first quarter in June in an effort to manage the Centre’s expenditure and finances better.

According to the sources in the finance ministry, since the second wave has resulted in movement curbs and other restrictions in several pockets of the country, the ministry is monitoring the use of funds and has advised that funding should be released only for projects which are important and after due approval. 

“We are closely monitoring the situation. While we will not hold funds for important projects, at this stage, every penny has to be spent well. This will be not be like last year, but with the second wave, we will be more prudent till June-end. We hope that the situation will start improving after that,” a senior official from the finance ministry told this publication.

The centre had issued a detailed list on expenditure management in an effort to save resources during the first outbreak last year too. According to sources, while the government has directed that healthcare expenditure should be the top priority, for other projects, funds will be released depending of the level of project progress.

There is also some buzz around  demands for a second relief package from the government,  but officials say that this would be taken up only when required.

“This year we are placed better. So, a relief package will be done only when required and will be directed to the sectors which need it the most. I do not see it coming immediately. Also, the Centre is taking decisions on a daily basis and is doing what is needful,” the official added.

While admitting that the second wave has been worse than anticipated, officials in the finance ministry and the Prime Minister’s Economic Advisory Council feel that the situation is likely to start improving post the month of June.

“The Centre is taking measures, but our internal assessment is that it may take at least two months for the situation be be back to normal. We hope that from July onwards, there will be enough vaccines in the market and a sizeable population will be vaccinated. Till then we are monitoring the situation,” the official added.  

Cash management in DoE control

Earlier this month, the Finance Ministry revamped the Public Financial Management System, putting the cash management system of the Government of India under the direct control of expenditure department.

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