The Finance Ministry on Tuesday relaxed cash management guidelines to boost spending in the remaining period of the current fiscal.
The move becomes imperative as low government-spending due to the general elections has affected growth during the April-June quarter of the current fiscal. Additionally, the government has set a target of spending more than ₹11 lakh crore as capital expenditure for the ongoing fiscal.
Stipulations relaxed
According to an official memorandum issued by the Economic Affairs Department, in order to provide requisite operational flexibility to execute the budget, stipulations applicable to big releases (₹500 crore or more) for all items of expenditure in the current fiscal will be relaxed, until further orders. This relaxation would be subjected to compliance of guidelines of the SNA (Single Nodal Agency)/CAN (Central Nodal Agency) and of MEP (Monthly Expenditure Plan) and QEP (Quarterly Expenditure Plan).
Earlier, according to a May 2022 office memorandum, release of amounts ranging between ₹500 crore and ₹2,000 crore had to be prepared to enable tracking of expenditure and cash flow. The GST inflow could be utilised between May 21 and 25 . Similarly, bulk expenditure items of over ₹2,000 crore in value was to be timed during the second fortnight in the last month of the quarter to avail of direct tax receipts inflow. Now, these stipulations will not exist.
Tax revenue
Data released by the Controller General of Accounts (CGA) last week showed that during the April-July period of the current fiscal, total expenditure incurred was over ₹13 lakh crore (27 per cent of corresponding BE 2024-25). Data also showed that during the April-July period, the net tax revenues rose by 23 per cent and non-tax revenues expanded by 55 per cent boosted by the RBI dividend, despite contraction in both revenue expenditure (2.3 per cent) and capex (15.4 per cent).
To meet the FY2025 BE, ₹8.5 lakh crore of capex needs to be attained in the last eight months of the year, an expansion of 34.6 per cent relative to the same period of FY2024 (₹6.3 lakh crore), which appears quite challenging. Guidelines may have been relaxed to boost this.
There is no change in other provisions. QEP is the sum up of three MEPs. QEP-1 means April-June period, QEP-2 means July-September period, QEP-3 means October-December period and QEP-4 means January-March period. Each of the 56 Central Ministries/Departments is required to give MEP and QEP to the Budget Division of the Finance Ministry. Based on the guidelines prepared in August 2017, there is no monthly or quarterly capping for the first 9 months. However, for the last quarter, there is a quarterly capping of 33 per cent and monthly capping of 15 per cent.