Crime Today News
To accelerate expenditure right from the beginning of the financial year, the Finance Ministry has indicated that liberal cash management guidelines with exchequer control-based expenditure management will continue for April-June quarter (Q1) of fiscal year 2025-26. (FY26)
“We do not see any change in the cash management guidelines. Also, liquidity is not an issue,” a senior Finance Minister official told businessline. As per the cash management guidelines, 56 ministries and departments are required to make monthly or quarterly expenditure plans. Generally, they are permitted to spend up to 25 per cent of Budget Estimates (BE) in each of the first three quarters (April-June, July-September and October-December). For the fourth quarter (January-March), the cap is 33 per cent, with an additional limit of 15 per cent for the last month. These limits are to ensure cash flow and even spreading of expenditure in 12 months.
According to the official quoted above, the cash management guidelines-cum-exchequer control-based expenditure measures issued in September last year are expected to continue during the first quarter of the current fiscal. Last September, the Finance Ministry had said that, in order to provide requisite operational flexibility to execute the budget, stipulations applicable to big releases (₹500 crore or more) for all items of expenditure in the current fiscal will be relaxed. This relaxation would be subject to compliance of guidelines of the SNA (Single Nodal Agency)/CAN (Central Nodal Agency) and of MEP (Monthly Expenditure Plan) and QEP (Quarterly Expenditure Plan).
Continuation of liberal guidelines is critical, as despite lowering the Capital Expenditure (capex) estimates for FY25, the actual may fall short. The BE for capex during FY25 was ₹11.11 lakh crore, which was revised to ₹10.18 lakh crore. Now, during 11 months, it was ₹8.11 lakh crore, which means such a head needs to expand by 44 per cent year-on-year or ₹2.1 lakh crore in March 2025 to meet the FY25 RE, which is appears to be real challenging.
At the same time, government aims to give big push to public expenditure to achieve higher growth. This is why the capex for FY26 has been estimated at ₹11.21 lakh crore which is 10 per cent higher than RE of FY25. Most importantly, the current fiscal will not face barriers to spending like last fiscal. Finance Minister Nirmala Sitharaman recently said that FY25 capex was influenced by several factors: the Model Code of Conduct during General Elections, extreme weather events and lower-than-expected spending by States and certain central agencies. Additionally, many States failed to submit Utilisation Certificates, making further fund releases imprudent. Clearly, ‘the revisions were not due to fiscal constraints, she said.
Published on April 6, 2025
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