Cash-strapped Finance Ministry has prohibited all government ministries and departments from putting forward new schemes in FY21, except those under the Pradhan Mantri Garib Kalyan Yojana and Atma Nirbhar Bharat Abhiyan.
The ministry has taken the decision to rein in outlays to deal with COVID-19 crisis-related expenses in the wake of falling revenue and mounting expenses due to lockdown, and a resultant economic downturn.
In keeping with the latest mandate by the Department of Expenditure (DoE) in the Finance Ministry, schemes that have already been sanctioned for this fiscal year have also been held off for the next 9 months, i.e., until March 31, 2021.
The department's directive stated that in the wake of an unprecedented demand for public financial resources, the available funds need to be utilised judiciously pursuant to emergent and varying priorities.
"In the wake of COVID-19 pandemic, there is unprecedented demand on the public financial resources and a need to use resources prudently in accordance with emerging and changing priorities," the expenditure department said in its order dated June 4.
"Many new proposals for 'in-principal' approval are being received from ministries/departments. This necessitated the DoE to issue fresh instructions," it further stated.
The latest move came following several new proposals received by the expenditure department of the (finance) ministry for 'in-principle' permission.
The Centre took such a drastic step as its revenue receipts are at an all-time low. As per the data available from the Comptroller General of Accounts (CGA), the total revenue receipts of the government during April 2020 was a paltry Rs 27,548 crore amounting to 1.2% of the budget estimate. However, in comparison, the total expenditure incurred by the govt was a whopping Rs 3.07 lakh crore which is 10% of the budget estimate.
This is the second such cost check the government has done owing to the COVID-19 outbreak following the spending restraints announced in the first quarter of FY21 on April 8.
The Centre had limited the outlays by most ministries and departments to 15-20 per cent in the first quarter of this fiscal, after freezing the dearness allowance hike for government employees.