Coronavirus Outbreak: : Finance ministry imposes expenditure restrictions on non-essential heads

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.

 Coronavirus Outbreak: : Finance ministry imposes expenditure restrictions on non-essential heads

File image of Finance Minister Nirmala Sitharaman. PIB photo

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.

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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.

Those falling in category A will be guided by MEP or QEP, while B category monthly expenditure may be kept at 8 percent of Budget Estimate (BE) for 2020-21 for the first month, and at 6 percent 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 percent 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.

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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 percent 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.

Sources had earlier said the finance ministry is working on a second relief package for the Indian economy hit hard by the coronavirus outbreak and the announcement could be made in the next few days.

Last month, the government announced a Rs 1.70 lakh crore relief package in the form of foodgrains and cash transfers for the vulnerable sections of the society to help them deal with the hardships caused by the lockdown.

Now, the government is working on a stimulus to be given to hard-hit sectors of the economy, including MSME, agriculture and allied activities, civil aviation, and hospitality after the lockdown is lifted, sources had said.

Updated Date: Apr 09, 2020 13:35:44 IST



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