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Finance Ministry relaxes spending guidelines to boost capital expenditure

26 Apr 2021 Evaluate

The Finance Ministry has relaxed the spending guidelines to enable ministries and departments to undertake capital expenditure totalling Rs 44,000 crore envisaged in the budget for 2021-22, to boost the economy grappling with the fresh COVID-19 wave. According to an office memorandum (OM) issued by the Finance Ministry, the monthly/quarterly expenditure plan (MEP/QEP) ceilings and restrictions will not apply for expenditure under the capital heads under the budget.

To enable ministries/departments expedite capital expenditure, it said the cash management guidelines issued by the Ministry of Finance under the OM of 2017 have been relaxed. It added ‘Monthly Expenditure Plan (MEP) or Quarterly Expenditure Plan (QEP) ceilings and restrictions on bulk expenditure items referred in the OM dated August 21, 2017, shall not be applicable for expenditure under the capital heads under the Budget. These relaxations shall take immediate effect and shall apply until further orders’.

According to the guidelines, the bulk expenditure items of more than Rs 2,000 crore were timed in the last month of each quarter to utilise the direct tax receipt inflows in June, September, December and March. Similarly, big releases of Rs 200 crore to Rs 2,000 crore were timed between the 21st and 25th of a month to take advantage of the GST inflows. These restrictions have been removed with the latest OM. Finance

Minister Nirmala Sitharaman in the Budget 2021-22 had announced a sharp increase in capital expenditure and provided Rs 5.54 lakh crore, which is 34.5 per cent more than the Budget Estimate (BE) of 2020-21. In the BE 2020-21, the government provided Rs 4.12 lakh crore for Capital Expenditure. It was revised upwards to 4.39 lakh crore.

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