Expenditure capping for fourth quarter, March restored
The Finance Ministry has permitted Central Ministries and Departments to carry forward unspent money in the next quarter of the fiscal. It has also reintroduced fourth quarter capping on expenditure which is 33 per cent in Jan-March period and 15 per cent in March.
These are parts of new Cash Management guidelines. Officials say change prescribed will help in borrowing plan. On Wednesday, a top government official said the slew of inflation control measures announced in the last few days will not alter the government’s borrowing calendar and the Centre will stick to its planned borrowings as of now.
“Ministries/Departments are now permitted to utilise the unspent balances from QEP-1 in QEP-2 within a financial year under intimation to the Budget Division for cash management purposes. Also, unspent balances from QEP-2 and QEP-3 may be utilised in QEP-3 and QEP-4, respectively only after formal and prior approval of the Secretary (Expenditure) has been obtained,” an Office Memorandum (OM), issued by Economic Affairs Department said. Earlier, automatic carry forward of saving in first three quarter was not permitted except revalidation by the Budget Division.
QEP refers to Quarterly Expenditure Plan and it is sum up of three MEP or Monthly Expenditure Plan. 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 55 Central Ministries/Departments are required to give MEP and QEP to the Budget Division of the Finance Ministry. Although, there is no rule, how much a Ministry/Department can spend in a month or quarter except 12th month and fourth quarter.
Based on the guidelines prepared in August 2017, there is no monthly or quarterly capping for first 9 months. However, for the last quarter, there is a quarterly capping of 33 per cent and monthly capping of 15 per cent. A Central Ministry or a Department is required to make monthly or quarterly expenditure plan and submit to the Finance Ministry. For FY 22, the Finance Ministry has relaxed the fourth quarter caps. Now for the current fiscal, these capping has been restored.
The instruction also said that financial advisors in Central Ministries and Departments will review and freeze the timing of receipts of dividend (from companies, the Ministry administers), and various other non-tax receipts (NTRs). The dividend payments and buy back considerations would be targeted in H1 (April-September) of the Financial Year.
“Each Ministry/Departments would indicate month wise estimate of the possible non-tax revenue inflows,” the instruction said. Such a mechanism will help to factor inflows while according permission for expenditure.
To manage borrowing
A senior Government official told BusinessLine that revision in cash management guidelines mainly aim to manage borrowing in the current fiscal. As, according to the budget, the Centre’s gross market borrowing for current fiscal is ₹14.31 lakh crore, out of which ₹8.45-lakh crore is planned to be borrowed in April-September.
However, recent measure of cutting road and infrastructure cess on petrol and diesel is estimated to have revenue foregone of ₹1-lakh crore. This coupled with additional subsidy of ₹1.10-lakh crore for fertiliser, subsidy amount of over ₹6,000 crore on LPG for Ujjwala and additional expenditure on food subsidy is putting pressure on overall revenue. Since, as on date, government officials are claiming to stick to borrowing calendar, despite higher then estimated expenditure, revision in cash management aims to help that, the official quoted above said.
Published on May 26, 2022