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Finance Ministry relaxes spending norms to boost capital expenditure

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To boost the economy with the fresh COVID-19 wave, the Finance Ministry has relaxed the spending guidelines to enable ministries and departments to incur capital expenditure of Rs 44,000 crore as envisaged in the budget of 2021-22.

According to an Office Memorandum (OM) released by the Finance Ministry on Thursday, the Monthly / Quarterly Expenditure Scheme (MEP / QEP) ceilings and restrictions will not be applicable for expenditure of capital heads under the budget.
To enable ministries / departments to accelerate capital expenditure, it said, the cash management guidelines issued under the OM of 2017 by the Ministry of Finance have been relaxed.

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The limits and restrictions of the Monthly Expenditure Scheme (MEP) or Quarterly Expenditure Plan (QEP) on bulk expenditure items specified in OM on August 21, 2017 will not be applicable for expenditure of capital heads under the budget. The effect will apply until further orders, ”it added.

As per the guidelines, the bulk expenditure head of over Rs 2,000 crore was exhausted in the last month of each quarter to utilize the flow of direct tax receipts in June, September, December and March.
Similarly, a huge release of Rs 200 to 25 crores was made between the 21st and 25th month to avail GST. These restrictions have been removed with the latest OM.

Finance Minister Nirmala Sitharaman announced a sharp increase in capital expenditure and provided Rs.5.56 lakh crore, which is 36.5 percent higher than the budget estimate (BE) of 2020-21.

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“Out of this, I have placed more than Rs 44,000 crore in the budget heads of the Department of Economic Affairs, which is provided for projects / programs / departments that show good progress on capital expenditure and require further funds ,” He said that.
He said that on top of this expenditure, the government would provide more than Rs 2 lakh crore to the states and autonomous bodies for their capital expenditure.

In BE 2020-21, the government provided Rs 4.12 lakh crore for capital expenditure. It was revised to 4.39 lakh crores.

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