Finance ministry relaxes norms for expenditure exceeding ₹500 crore to give boost capex

The finance ministry has relaxed norms for expenditure exceeding ₹500 crore to accelerate capex (capital expenditure) that is pegged at ₹11.11 lakh crore for the current fiscal.

This will give a push to government spending, which suffered a slowdown for a couple of months due to general elections.

Finance Minister Nirmala Sitharaman in the Budget proposed to raise the capital expenditure target by 11.1% to record ₹11.11 lakh crore for 2024-25.

To provide requisite operational flexibility in the execution of the budget, it has been decided to relax rules for big releases above ₹500 crore for all items of expenditure in the current financial year, an office memorandum dated September 2, 2024, said.

The relaxation permitted is subject to strict compliance by all ministries and departments, it said.

All expenditures should be in compliance with the guidelines of the Single Nodal Agency (SNA)/Central Nodal Agency (CNA) and the Monthly Expenditure Plan (MEP) and Quarterly Expenditure Plan (QEP) ceiling prepared by ministries for both scheme and non-scheme expenditures, it said.

Earlier, according to a May 2022 memorandum, the release of amounts ranging between ₹500 crore and ₹2,000 crore had to be prepared to enable tracking of expenditure and cash flow.

The range of dates for such releases may be kept between the 21st and 25th of a month to take advantage of the Goods and Services Tax (GST) inflows.

Similarly, bulk expenditure items of over ₹2,000 crore in value were to be timed during the second fortnight in the last month of the quarter to avail of direct tax receipts inflow. Now, these conditions will not exist.

Financial advisers would review and freeze the timing of the receipts of dividends of various other non-tax receipts of their respective ministries and departments, it said.

The dividend payments and buyback considerations would be targeted in the H1 part of the financial year, it added.