Govt Extends Relaxation of Stipulations under Cash Management Guidelines

The Finance Ministry has extended the relaxation of stipulations on capital expenditure (capex) above Rs. 500 crores (regarding prescribed dates for major expenditure, prior approval from the Budget Division, etc.) to the second quarter of the current fiscal year. This decision aims to boost capital expenditure by central ministries.

In April 2023, the ministry initially lifted all restrictions and conditions on capital expenditure by ministries under centrally sponsored schemes (CSS) and grants-in-aid for the creation of capital assets for the first quarter of the fiscal year. The stipulations referred to here were imposed under the cash management guidelines which were modified in 2022.

It has been announced that this relaxation would continue for the second quarter of the fiscal year. The ministry stated, “For subsequent quarters, a separate advisory will be issued prior to the commencement of the quarter. This relaxation will be subject to strict adherence to the guidelines issued by the Department of Expenditure for the Single Nodal Agency (SNA) and Central Nodal Agency (CNA)”.

Typically, ministries and departments are allowed to spend 25% of their budget in each quarter. However, due to various factors, the expenditure in the first and second quarters was slower than the authorized maximum.

To ensure effective financial control, ministries are required to synchronize significant expenditure items with monthly Goods and Services Tax (GST) receipts and quarterly advance tax payments, following the cash management guidelines.