New Delhi: The finance ministry on Wednesday imposed spending restrictions on various ministries and departments in view of revenue constraints caused by the COVID-19 crisis.
Few ministries and departments like health and family welfare, pharma, food and public distribution and AYUSH will get funds as per the Budget, while others like fertilizer, post, road transport, petroleum, commerce and coal will face spending cuts.
"The existing guidelines for expenditure control have been reviewed. Keeping in view the present situation arising out of COVID-19 and the consequential lockdown, it is expected that the cash position of the government may be stressed in the first quarter of 2020-21," an office memorandum issued by the finance ministry said.
Considering this, it is essential to regulate the government expenditure and fix the Quarterly Expenditure Plan (QEP) or Monthly Expenditure Plan (MEP) of specific ministry or department, it said.
As per the priority, departments and ministries have been categorised in terms of their importance in the present situation. Those falling under category A will get funds as per the approved plan, while those under B and C will witness cut in their expenditure.
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Those falling in category A will be guided by MEP or QEP, while B category monthly expenditure may be kept at 8 per cent of Budget Estimate (BE) for 2020-21 for the first month, and at 6 per cent each of BE 2020-21 for the last two months of the first quarter.
For the C category, the departments need to restrict the overall expenditure within 15 per cent of BE of 2020-21.
Some of the important departments falling in this category include corporate affairs, department of investment and public investment management, housing and urban affairs, and labour and employment.
Items of large expenditure would continue to be governed by the guidelines issued by the finance ministry, it said.
Ministries and departments are advised to observe the guidelines strictly and regulate the expenditure accordingly in the current fiscal and any deviation from these guidelines would require prior approval from the finance ministry, it added.
The development comes days after the Union Cabinet approved a 30 per cent reduction in salary and allowances of MPs for one year. Also, the President, Vice-President and the governors have voluntarily decided to take a pay cut as a concerted effort to aid the fight to contain the deadly virus.
FinMin allows states to borrow Rs 3.20 lakh cr from market
The Finance Ministry has also allowed all states to borrow a cumulative Rs 3.20 lakhcrore from market between April-December.
The move comes amid states' demand for higher funds from the Centre to meet the expenses in dealing with COVID-19 pandemic.
In a letter to the RBI, the ministry said that the Centre has decided to permit states to raise open market borrowing on the basis of 50 per cent the Net Borrowing Ceiling fixed for the year 2020-21 for financing the states's annual plan for the fiscal.
As per the letter by the Department of Expenditure to the RBI, 28 states have been allowed to borrow a cumulative Rs 3,20,481 crore from markets on an ad-hoc basis for the first nine months of the current fiscal.
Accordingly, West Bengal can borrow Rs 20,362 crore, Maharashtra (Rs 46,182 crore), Uttar Pradesh (Rs 29,108 crore), Karnataka (Rs 27,054 crore), Gujarat (Rs 26,112 crore) and Rajasthan (Rs 16,387 crore).
"RBI is requested to make necessary arrangement in consultation with state government to raise the open market borrowing," the letter said.
It also said that further consent for raising open market borrowing during April-December will be processed after receiving complete information from states.
(PTI Report)
