Finmin reimposes spending curbs on ministries, depts for Q2 of FY22

The finance ministry on Wednesday reimposed expenditure curbs on various central ministries departments for the July-September quarter of the current financial year.

Putting these ministries departments into two categories, government feels that it is essential to regulate the expenditure plan for each bucket keeping in mind the cash position ahead of expected third wave. However, there will be no spending restrictions on Health, MSME Rural Development.

“The existing guidelines for expenditure control have been reviewed. Keeping in view the evolving situation arising out of Covid-19 anticipated cash position of government, it is felt essential to regulate Quarterly Expenditure Plan (QEP)/Monthly Expenditure Plan (MEP) of specific ministries/departments for July-September, 2021,” the Economic Affairs Department in the finance ministry said in a notification.

The ministry had last year in April imposed quarterly spending curbs on ministries departments following the nationwide lockdown imposed to contain the first wave of the pandemic the subsequent fall in revenue. These were relaxed later were also removed in December.

Early this month, the finance ministry has even asked all departments to cut “controllable expenditure” such as advertisement publicity by a fifth to curb wasteful expenses.

This has come at a time when the Ministry announced 6.29-lakh crore economic relief package to support the pandemic-hit economy.

As part of the package to support the Covid-19 pandemic-hit economy, Finance Minister Nirmala Sitharaman had on Monday announced Rs 1.5 trillion of additional credit for small medium businesses, more funds for the healthcare sector, loans to tourism agencies guides, waiver of visa fee for foreign tourists.

The Centre has been facing higher expenditure on account of centralised procurement of Covid vaccines the free food ration programme that’s been extended till November.

Under the new notification, demands/appropriations related with various central ministries departments have been grouped into two.

In Category-I, departments such as Health & Family Welfare, pharmaceuticals, Fertiliser, Agriculture, Railway, MSME, Rural Development can spend as per existing guidelines no restrictions have been put on them.

Expenditure heads in Category-II consist of 81 demands/appropriations related with Ministries Departments such as Civil Aviation, Home, Labour, Mines, Power beside others Departments like Post, Consumer Affairs, Telecommunication, Fisheries, Heavy Industries beside others. They will be required to “restrict the overall expenditure within 20 per cent of BE 2020-21 in Quarter 2 (July to September, 2021)”.

Last year, the ministry had divided them into three categories based on demands/appropriations approved in the Budget. The first category was in line with the recent rule where there is no monthly or quarterly capping. However, every expenditure proposal must adhere to the existing guidelines vetted by the Finance Ministry.

The second category had 31 demands/appropriations related to Fertilizers, Posts, Defence Pension, Transfer to Union Territories, Oil Road Transport Highways, with quarterly limit of 20 per cent of the Budget Estimate different monthly limit. The third category had 52 items 15 per cent limit for the quarter 5 per cent for each of the three months.

According to the 2017 guidelines, normally there is no monthly or quarterly capping for first 9 months. However, for the last quarter, there is quarterly capping of 33 per cent monthly capping of 15 per cent.

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