Number of Central Ministries and Departments have approached the Finance Ministry for relaxing expenditure limit related to the January-March Quarter (Q4) of the current fiscal for higher capital expenditure. They are hopeful of getting relaxation and also expect overall capital expenditure to be much higher next fiscal.
The Budget for the Fiscal Year 2021-22 (FY22) provided ₹5.54-lakh crore for capital expenditure which is 34.5 per cent more than the Budget Estimate (BE) of the Fiscal Year 2020-21 (FY21). According to the Budget Manual, capital expenditure deals with expenditure incurred with the object either of increasing concrete assets of a material and permanent character or of reducing recurring liabilities. It also includes receipts of a Capital nature intended to be applied as set off to Capital expenditure.
Data from Controller General of Accounts (CGA) showed 55 Central Ministries/Departments with 101 Demands for Grants showed capital expenditure in April-November period (First eight months of current fiscal) has been around ₹2.74-lakh crore — 49.4 per cent of BE (vs 58.5 per cent in FY21). This means, the government will have to spend the remaining 50.6 per cent in the last four months of the current fiscal.
Deviation from expenditure plan
Though, government officials say this is not impossible, still there will be a requirement for relaxation in quarterly and monthly expenditure limit, as prescribed under ‘Cash Management System in Central Government – Modified Exchequer Control Based Expenditure Management’ dated August 21, 2017. Under this it has been said: “Not more than 33 per cent and 15 per cent of Budget Estimates shall be permissible respectively in the last quarter and last month of the financial year. The restrictions shall be observed both scheme wise as well as for Demand for Grants as a whole.”
As the Office Memorandum (OM) made it clear that any deviation from Monthly Expenditure Plan (MEP) and Quarterly Expenditure Plan (QEP) will not be permitted without prior approval from Budget Division and Expenditure Secretary respectively, number of Ministries/Departments have sought relaxation. “Many Ministries have already sent letters while some are in the process of doing so. There should not be any problem in granting relaxation as the Finance Minister herself has emphasised for increasing capital expenditure after providing a higher amount in the budget,” a senior Government official told BusinessLine. Further, he reminded that August 2017 OM clearly says no ex-post facto approval for the deviations from the approved QEP shall be normally considered.
Though, as shown in CGA data, number of Ministries/Departments have reported lower capital spending in April-November period and prominent among them is Defence (Capital Outlay on Defence Services), Department of Economic Affairs or Ministry of Power, key infrastructure Ministries such as Road Transport and Highways (68 per cent of BE) Railway (61 per cent) or strategic one such as Department of Atomic Energy (60 per cent) are showing good progress.
Officials expect the present overall trend of capital expenditure will not have any impact on capital expenditure provision for next fiscal i.e., FY 23. “As next fiscal will require more capital expenditure to facilitate speeding recovery momentum, allocation will see good growth,” the official said. The figure will be known on February 1 when Finance Minister Nirmala Sitharaman will present the Union Budget.