In view of the fragile financial position, the finance ministry has capped expenditures in the last quarter of the current fiscal under a revised criteria of 3-8% reduction from the existing guidelines and directed all government departments and ministries to restrict within the budgeted expenditures.
Considering the fiscal position of the government in the current financial year, it has been decided to cap the expenditure in the last quarter /last months of the current financial years 2019-20 under the Cash Management System, a Department of Economic Affairs circular said to all ministries.
Expenditure in the last quarter in 2019-20 be restricted to 25% of BE and in the last month of March of the current fiscal it should not be more than 10% of the BE. In case of additional expenditure agreed in Revised estimates stage , such expenses can be incurred only after parliament approval.
The guidelines for cash management in the Q4 and month of the fiscal 20 in last quarter (Jan-March) is 25% of the BE from the earlier 33% of the BE and in the last month of March is 10% of the BE against 15% earlier and in Balance period (Jan-Feb) it will be 15% of the BE against the existing criteria of 18% of BE, said the circular.
Large expenditures will be governed by the expenditure control guidelines in August 2017 which states prior permission of the Bulge division will be required for any single payment in excess of Rs 5,000 crore. The move has been taken to avert any situation of temporary mismatches in cash outflows and inflows and thereby prevent additional transitory borrowing through treasury bills, CMBs and help save interest on expenses.
It would also prevent unnecessary build of cash which creates liquidity crunch in the economy and in the process raises the cost of government borrowings. Cash Management Bills (CMBs) are short term bills issued by the central government to meet its immediate cash needs.
The bills are issued by the RBI on behalf of the government. Hence the CMBs are short-term money market instruments that help the government to meet its temporary cash flow mismatches. Cash Management Bills (CMBs) are short term bills issued by central government to meet its immediate cash needs. The bills are issued by the RBI on be half of the government.
The country's fiscal deficit hit 114.8% of 2019-20 Budget Estimate at Rs 8.07 lakh crore at the end of November, official data showed on Tuesday. The fiscal deficit or the gap between expenditure and revenue was at Rs 8,07,834 crore as on November 30, 2019, according to the data released by the Controller General of Accounts (CGA).
"The Government of India has received Rs 10,12,223 crore (48.60% of corresponding BE 2019-20 of Total Receipts) up to November 2019 comprising Rs 7,50,614 crore Tax Revenue (Net to Centre), Rs 2,32,600 crore of Non-Tax Revenue and Rs 29,009 crore of Non-Debt Capital Receipts."
Non Debt Capital Receipts consists of Recovery of Loans (Rs 10,910 crore) and Disinvestment Proceeds (Rs 18,099 crore), it said. For the entire 2019-20, the revenue receipts have been pegged at Rs 19.62 lakh crore.
It further said Rs 4,21,850 crore has been transferred to state governments as Devolution of Share of Taxes by government of India up to this period which is Rs 10,113 crore lower than the previous year.
"Total Expenditure incurred by the government of India is Rs 18,20,057 crore (65.3% of corresponding BE 2019-20), out of which Rs 16,06,215 crore is on Revenue Account and Rs 2,13,842 crore on capital account."