Finance ministry gives leeway to departments on big spendings

financialexpress.com:

To accelerate public spending in the last quarter of the current fiscal, the finance ministry has relaxed cash management guidelines to allow departments and ministries to release Rs 500 crore or more in schemes without any restrictions.

According to extant cash management guidelines, ministries must attune bulk expenditure items to monthly GST collections and quarterly advance tax payments for smooth exchequer control.

The guidelines also mandate that the release of Rs 500 crore and Rs 2,000 crore are to be made during the 21st and 25th of a month to take advantage of GST collections. Similarly, bulk expenditures over Rs 2,000 crore are to be released from the 17th to the 25th of the last month of a quarter to utilise direct advance tax receipts.

Also, prior permission from the budget division is required for any single payment under a scheme over Rs 5,000 crore.

To provide a fillip to capital expenditure, it has been decided to remove all these restrictions, the Department of Economic Affairs said in an office memorandum dated December 29.

“Financial Advisers (FAs) shall monitor the releases to ensure that there is no idle parking of funds at any level and the funds are released on a just-in-time basis,” according to the memorandum.

The latest advisory to departments assumes importance as the government would likely switch to election mode after the presentation of the Union Budget on February 1.

Till November of the current fiscal, the Centre’s capex has reached 58.5% compared with 59.6% in the year-ago period. Similarly, Revenue expenditure has reached 59% of the FY24 budget estimate compared with 62.5% of the relevant target in the previous fiscal.