Ministries' spending in wake of stressed cash position restricted

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SME Times News Bureau | 08 Apr, 2020
In view of the stressed cash position arising out of Covid-19 and the consequential lock down, the government has decided to modify its cash management system restricting expenditure of ministries between 15 -20 per cent of the budgeted level in the April-June quarter of the current financial year.

As per an office memorandum issued by the Department of Economic Affairs (DEA) on Wednesday, it has been decided to regulate expenditure of the government and fix quarterly and monthly expenditure plan for certain demands and appropriation raised by ministries, this would keep a tab on expenditure and ensure that spending is done only most essential items in the first quarter.

Also demand of certain other ministries has been categorised into two segments with one set directed to restrict expenditure to 20 per cent of the budget estimate for FY21 in Q1 while other to keep spending restricted to 15 per cent of estimates.

"Keeping in view the present situation arising out of Covid-19 and the consequential lock down, it is expected that the cash position of the government may be stressed in Q1 (April to June, 2020) of 2020-21. Considering this, it is essential to regulate the government expenditure and to fix quarterly expenditure plan (QEP)/monthly expenditure plan (MEP) of specific ministries/departments," the DEA office memorandum read.

The changes have been done in the cash management system of the Central government that follows a modified exchequer control based expenditure management.

All ministries have been told to strictly follow the guidelines and regulate expenditure accordingly. Any deviation from the guideline would require prior approval of the Ministry of Finance.

Moreover, items of large expenditure would continue to be governed by 2016 and 2017 guidelines.

Sources said that the changes on expenditure management has been done to keep unproductive expenditure of ministries under check so that government has some elbow room to launch targeted stimulus measures to fight disruptions coming from the spread of the virus.