Finance Ministry orders fresh round of expenditure curbs

In a fresh round of austerity measures, the finance ministry has capped expenditure by various central ministries and departments at 20% of their budget allocations for the July-September quarter, according to a memorandum issued on Wednesday.

The move was similar to last year when ministries and departments were divided into three categories and their expenditure capped at 15-20% of their annual budget to cut down on non-essential spending during the first wave of the Covid-19 pandemic.

This time around, the finance ministry has detailed just two categories with a majority of the ministries and departments falling under the 20% spending limit.

“Keeping in view the evolving situation arising out of Covid-19 and anticipated cash position of government, it is felt essential to regulate quarterly expenditure plan (QEP)/monthly expenditure plan (MEP) of specific ministries/departments for quarter 2 (July-September, 2021),” the department of economic affairs said in the memorandum.

The move comes close on the heels of the department of expenditure directing all ministries and departments to cut controllable expenditure by a fifth along with 18 suggestions to curb spending, ranging from advertisement and publicity to overtime allowance.

The latest directive follows the relief package announced by finance minister Nirmala Sitharaman on Monday, which involved an additional fiscal outgo of up to Rs 60,000 crore during the current fiscal.

Expenditures by the ministries of health and family welfare, railways and housing and urban affairs along with the departments of space, pharmaceuticals and rural development would continue under existing guidelines.

On the other hand, spending by the ministries of tourism and skill development and departments of school education and literacy and chemicals and petrochemicals, among others, would be capped.

North Block is pushing ministries to frontload their capital expenditure even as it seeks to curb wasteful spending. The department had in April eased expenditure management rules to boost capital spending, exempting it from curbs imposed in 2017.