Ministries told to limit Q2 spending at 20% of BE

By: |
July 01, 2021 4:30 AM

In the business-as-usual scenario, the departments are allowed to spend about 25% of their respective BEs in Q2 subject to quarterly and monthly plans approved by the finance ministry. Some departments were even allowed to spend more than 25% in a quarter subject to prior approvals.

The total budget expenditure is estimated to be Rs 34.8 lakh crore (BE) in FY22.

The Centre on Wednesday asked many ministries and departments to scale down their Q2FY22 expenditure plans by 5 percentage points from the business-as-usual level of 25% of the full-year spending. The move is part of re-prioritisation of spending in the wake of second Covid wave, and may not result in overall reduction in expendiure.

It could not be immediately estimated what would be the quantum of reduction in expenditure in Q2FY21 because of the rationalisation measure. The total budget expenditure is estimated to be Rs 34.8 lakh crore (BE) in FY22.

In the business-as-usual scenario, the departments are allowed to spend about 25% of their respective BEs in Q2 subject to quarterly and monthly plans approved by the finance ministry. Some departments were even allowed to spend more than 25% in a quarter subject to prior approvals.

Departments/agencies which will have to restrict the overall expenditure within 20% of BE include Labour, Panchayati Raj, Social Justice, Posts, Telecom, Consumer Affairs, Home, Police, Defence (civil), Defence (revenue), School Education and Higher Education, among dozens of others.

“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 (QEP)/monthly expenditure plan (MEP) of specific ministries/departments for quarter 2 (July-September 2021),” the finance ministry said in an office memorandum.

However, the finance ministry has spared some of the key departments/agencies from expenditure compression measure which are crucial in the fight against coronavirus such as health, agriculture, food, rural development, railways and road. Similarly expenditures towards interest payments and transfers to states will be unaffected, the finance ministry said.

With revenues likely to fall short of budget targets even as the government announced a slew of relief measures for people and industry, the latest order for Q2FY21 spending follows a set of instructions issued earlier in June to departments to curb certain regular but ‘controllable’ and ‘avoidable’ expenditure.

On June 12, finance ministry asked all the ministries/ departments to curtail all avoidable non-scheme expenditure and aim for 20% reduction in controllable expenditure on items such as overtime allowance, rewards, domestic travel expenses, foreign travel expenses, office expenses, rents, etc.

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