scorecardresearch

Centre eases spending caps for Q4 and March

The budgetary capex saw a sharp 54% decline in November 2021.

As per the existing guidelines, expenditure in the last quarter of a financial year is capped at 33% of BE and the spending in March can't exceed 15% of BE.
As per the existing guidelines, expenditure in the last quarter of a financial year is capped at 33% of BE and the spending in March can't exceed 15% of BE.

With the pace of capital expenditure slowing down in the third quarter of the current financial year, the finance ministry has relaxed spending norms to allow government departments to spend more than the customary level of a third of the annual Budget outlays in the fourth quarter and in the final month of March. Of course, the spending leeway will be subject to the ceiling of revised estimates (RE) for FY22 to be presented in the Budget for FY23 on February 1.

As per the existing guidelines, expenditure in the last quarter of a financial year is capped at 33% of BE and the spending in March can’t exceed 15% of BE.
The relaxations are aimed at impelling departments that have failed to spend as much as they should have to accelerate spending in the fourth quarter without worrying about quarterly or monthly limits, and thereby aiding economic activities amid the third wave.

The Centre’s budgetary capex grew by 14% on year in April-November of FY22 over the actuals of the corresponding period a year ago against the required growth rate of 30% to achieve the full-year target of Rs 5.54 lakh crore. The budgetary capex saw a sharp 54% decline in November 2021.

Despite announcing extra spend of about Rs 3 lakh crore over the BEFY22, the Centre could still manage fiscal deficit within the targeted 6.8% of GDP due to overall buoyancy in tax revenues, savings from expenditure curbs in H1 and discontinuation of cooking gas subsidy. Most departments were asked to contain spending in July-September at 20% of BE against the norm of 25%. The spending curbs on departments were lifted on September 24. In April-November of FY22, the Centre’s total expenditure stood at Rs 20.7 lakh crore or 59.6% of the full-year estimate compared with 62.7% of the relevant target in the year-ago period.

“It has now been decided to relax the upper limit of 33% of BE as applicable for last quarter of the current financial year, as a one-time measure, subject to the condition that ceiling of RE 2021-22 is not exceeded. For the items of capital expenditure, the ceiling of 15% of BE in the last month for this fiscal is also relaxed, provided the capital/overall expenditure is within the RE 2021-22,” the department of economic affairs said in an office memorandum.

In view of the relaxation, ministries and departments have been asked to carry out consequential modifications in their quarterly expenditure plan (QEP)/monthly expenditure plan (MEP), according to the memorandum.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.