Govt's Covid stimulus forces cut in ministries' quarterly expenditure

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The Union Finance Ministry has directed specific ministries and departments to restrict expenditure within 20 per cent of the Budget Estimate for FY22 in the upcoming July-September quarter, in view of the Covid-19 situation. The concerned departments which would come under the revised guidelines include Ministry of Civil Aviation, Department of Commerce, Department of Consumer Affairs, Ministry of Culture, Department of Higher Education, Ministry of Electronics and Information Technology among others.

The official memorandum circulated by the Department of Economic Affairs said: "The existing guidelines for expenditure control have been reviewed. Keeping in view the evolving situation arising out of Covid-19 and anticipated cash position of government, it is felt essential to regulate Quarterly Expenditure Plan/Monthly Expenditure Plan of specific ministries/departments for Quarter 2." It added that ministries and departments are advised to observe the guidelines strictly and regulate the expenditure accordingly in the current fiscal and any deviation from the guidelines would require prior approval from the Finance Ministry.

Such restriction was earlier placed in cases of large expenditure of Rs 2,000 crore or more or for expenses beyond the monthly expenditure plan given by the ministries. "While processing for relaxation of guidelines, priority will be given to relaxations arising on account of increases in capital expenditure." This has been done to see that only productive expenditure is given priority while routine expenses are kept within agreed budget ceilings. The government expects its expenditure needs to remain tight even this fiscal as continuing Covid pandemic may require it to come with relief and stimulus measures that would require budgeted expenditure to surpass the limits.

The government is targeting to borrow Rs 12 lakh crore in FY22, same as last year. But last year it had to double the borrowing limit in wake of additional expenditure needs created by the pandemic. The expectation is that unforeseen expenses would rise this year as well so cash conservation exercise has been carried out. The directive of expenditure control for July-September quarter to ministries is also expected to lead to savings at the end of fiscal year as an earlier 2017 memorandum from the department of expenditure already restricts ministries' expenses to not more than 33 per cent level in the last quarter of a financial year and 15 per cent of estimate in the last month of the fiscal year.

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