The order directed ministries and departments to not bunch up expenditures or releases in order to avoid idle parking of funds. With the government staring at a situation of acute cash stress, the ministry of finance has disallowed the automatic carry forward of unspent money by various ministries and departments over the next month or quarter.
Further, the ministry decided that the April 8 order restricting overall quarterly expenditure of certain ministries and departments to 15-20% of their budgeted amounts in the first quarter of this fiscal, will continue through the second quarter.
“Considering the need to effectively manage the cash flows of the Government, it has been decided to retain and continue with the same expenditure management measures in Q2, as was applicable for Q1 of FY 2020-21,” the order said, adding further guidelines to curtail expenses.
The latest decision, in a slew of measures tightening the government’s purse strings, taken on Tuesday, is indicative of the severity of its fiscal constraints.
Earlier this month, the finance ministry had barred all new scheme proposals for the ongoing fiscal apart from those under the ambit of the stimulus package. Prior to that, the government froze already announced hikes in the dearness allowance for its employees till March 2021.
While the extended lockdown will have a significant adverse impact on both direct and indirect tax collections the government’s expenditures are only rising as it focuses on propping up the economy.
Additionally, the order directed ministries and departments to not bunch up expenditures or releases in order to avoid idle parking of funds.
“Ministries/Departments while utilising their allocations shall take utmost care to not bunch up expenditures/releases in a bid to improve their pace of expenditure leading to parking of funds. In these times of acute cash stress, utmost care may be taken to avoid releases that can contribute to idle parking of funds,” it said.
Source: indiatimes.com