Finance Ministry asks depts to slow down last minute spending
To contain the fiscal deficit in the face of a likely huge revenue receipt shortfall, Finance Ministry has asked other ministries and departments not to rush expenditure in the last quarter (January-March) of the current financial year which it says will be treated as breach of financial propriety while limiting to those expense for which payments have been made earlier.
By : migrator
Update: 2020-01-29 20:10 GMT
New Delhi
“According to Rule 62(3) of the General Financial Rules, 2017, rush of expenditures particularly in the closing months of financial year shall be regarded as breach of financial propriety and shall be avoided. Finance ministry had already sensitized all administrative heads’ rush of expenditure in the year must be strictly avoided.
As per extant guidelines, the last quarter expenditure must be limited to actual procurement of goods and services and reimbursements of expenditures already occurred,” the department of expenditure said in a circular to all department secretaries and financial advisors.
There are indications that government may cut spending by up to Rs 2 lakh crore to curb rising fiscal deficit. It has spent about 65 per cent of the total expenditure target of Rs 27.86 lakh crore till November but reduced the pace of spending in October and November, as per government data.
Finance Ministry faces one of the biggest tax shortfalls in recent years which could be at least up to Rs 2.5 lakh crore from both direct and indirect taxes. The lack of disinvestment revenues and the outgo of Rs 1.45 lakh crore due to the corporate tax cut in August last year has only added to the revenue-expenditure gap.
Asia’s third largest economy, growing at its slowest pace of 4.5 per cent in over six years because of lack of private investment, though could be hurt further due to the likely cut in spending but has limited options. The government is likely to keep the fiscal deficit under 3.8 per cent of gross domestic product, sources said, while letting it slip from its earlier set target of 3.3 per cent for the year.
It may be recalled that the Budget division of the ministry last month had revised the limits of expenditure in the last quarter from 33 to 25 per cent and in March from 15 to 10 per cent.
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