Finance Ministry issues guidelines to depts for better fiscal management

New Delhi: For better fiscal management, the Finance Ministry today asked various departments and ministries to stick to their expenditure plans while making prior-approval from the budget division mandatory for any single payment release of over Rs 5000 crore.

Notifying guidelines for more effective cash and expenditure management of the government, the Finance Ministry said, "Practice of expenditure beyond quarterly expenditure plans (QEP) without prior approval of Secretary( Expenditure) would be viewed adversely."

"Prior permission from Budget division shall be pre- requisite for any single payment release in excess of Rs 5,000 crore. The Financial Advisers (FAs) must guard against attempts to deliberately split expenditure to stay within limits," the guidelines said.

To bring about more effectiveness and efficiency in cash management system, the government in May constituted a committee headed by Joint Secretary (Budget) with members from office of CGA, RBI and Budget division.

Based on deliberations of the committee with financial advisers of some key ministries representing infrastructure, social and economic sector, the guidelines have been issues, the Finance Ministry said.

The guidelines will "help avert situation of temporary mismatches in cash outflows and inflows, prevent additional transitory borrowing through treasury bills... help save on interest expenses", the ministry said. As per the guidelines, not more than 33 per cent and 15 per cent expenditure, subject to revised estimate ceiling, shall be permissible respectively in the last quarter and last month of the financial year.

"The restriction shall be observed both scheme-wise as well as demand of grant as a whole," the ministry said. All financial advisers shall ensure that Monthly/Quarterly Expenditure Plan (MEP/QEP) of respective ministries are prepared and sent to Budget division of Ministry of Finance within two weeks of passing of their detailed demand for grants in Parliament.

Besides, the memorandum noted that the relaxation of the QEP and carry forward of unspent amount across the quarters may be exception rather than norms. It further said savings, if any, incurred during QEP would not be available for automatic carry forward to the next quarter, without revalidation of such savings by the Budget division for the next quarter through modification of QEP.