Finance Ministry Relaxes Norms to Accelerate Capital Expenditure

The finance ministry has relaxed norms for expenditures exceeding Rs 500 crore to boost capital expenditure, which is set at Rs 11.11 lakh crore for the current fiscal. This aims to rejuvenate government spending that slowed due to elections. All expenditures will comply with strict guidelines and review processes.

The finance ministry has eased regulations for expenditures exceeding Rs 500 crore to hasten capital expenditure, earmarked at Rs 11.11 lakh crore for the current fiscal year.

This initiative is expected to stimulate government spending, which experienced a slowdown during the general elections.

Finance Minister Nirmala Sitharaman's budget proposal aims to increase the capital expenditure target by 11.1% to a record high of Rs 11.11 lakh crore for 2024-25.

To ensure operational flexibility in budget execution, rules for significant releases over Rs 500 crore have been relaxed for all expenditure items this financial year, according to an office memorandum dated September 2, 2024.

However, this relaxation is contingent upon strict compliance by all ministries and departments.

All expenditures must adhere to guidelines from the Single Nodal Agency (SNA)/Central Nodal Agency (CNA) and follow the Monthly Expenditure Plan (MEP) and Quarterly Expenditure Plan (QEP) ceilings set by the ministries for both scheme and non-scheme expenditure.

Previously, a May 2022 memorandum mandated tracking expenditures and cash flows for amounts between Rs 500 crore and Rs 2,000 crore.

Release dates for such expenditures were set between the 21st and 25th of each month to align with GST inflows.

Similarly, bulk expenditures over Rs 2,000 crore were to be timed in the latter half of the last month of the quarter to coincide with direct tax receipts. These conditions have now been lifted.

Financial Advisers will review and determine the timing for receiving dividends and other non-tax receipts for their respective ministries and departments.

Dividend payments and buyback considerations will be aimed for the first half of the financial year, the memorandum added.

(With inputs from agencies.)