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Govt relaxes spending by ministers to boost public expenditure

The Centre has raised the capital expenditure target by 35.4% on year to Rs 7.5 trillion for FY23 to continue the public investment-led economic recovery of the pandemic-battered economy. The capex last year was Rs 5.5 trillion.

The double-digit price hikes drove up the growth in the FMCG space by 6% y-o-y in the three months to March helping offset the contraction in volumes to the extent of 4.1% y-o-y.

To keep the momentum of government spending, the finance ministry has allowed all ministries to utilise the unspent portion of the funds released to them in a quarter in the subsequent quarter.

The flexibility can be availed by the ministries and departments in the first quarter of a financial year after intimating the budget division of the finance ministry. However, the unspent balances from the second and third quarters can be utilised in the third and fourth quarters respectively only with “formal and prior approval of the expenditure secretary,” the finance ministry said in an office memorandum.

“Ministry/Department should not under any circumstance presume prior approval of Expenditure Secretary. This has to be formally obtained prior to utilising the unspent balances. Seeking post facto approval is not an option,” as per the memorandum dated May 25, 2022.

Usually, the ministries and departments are allowed to spend 25% of their budget in each quarter. No more than 33% and 15% of expenditure of the Budget Estimates during a financial year would be permissible in the last quarter and last month of the financial year, respectively.

With the capital expenditure often taking more time than anticipated, the relaxation about the utilisation of unspent amount in a quarter will help the departments to execute projects without fear of losing sanctioned budget.

The Centre has raised the capital expenditure target by 35.4% on year to Rs 7.5 trillion for FY23 to continue the public investment-led economic recovery of the pandemic-battered economy. The capex last year was Rs 5.5 trillion.

The finance ministry has also advised all financial advisers to ensure that a monthly expenditure plan or quarterly expenditure plan (MEP/QEP) tracking sanctions and concurrent expenditure against the Budget provisions are available.

Within the MEP/QEP, it advised ministries to time bulk expenditure items of more than Rs 2,000 crore to monthly GST collections and quarterly advance tax payments for smooth cash management.

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