Seeing prolonged lockdown and its impact on revenue, government has initiated expenditure curbs on central departments and ministries, restricting expenses only for most essential works and putting others off to the July quarter.
Sources in the government said, ministries and departments had restricted their expenses only towards payment of salaries & wages and most essential office expenditures while deferring the rest.
An office memorandum, issued by the Comptroller and Auditor General (CAG) of India on Wednesday said the Finance Ministry had restricted non-salary expenditures by the Indian Audit and Accounts Department to 10 per cent of the Budget Estimate for the April-June quarter of FY21, while the cap for paying salary was 20 per cent of BE.
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Only payment towards regular salaries and children education allowance will be made and other allowances, like salary arrears, LTC and leave encashment, will not be made till June 30 without prior approval of the headquarters.
Similarly, the advance payment for medical costs will only be in case of emergencies, while non-essential expenditures, like publication, will be stopped for three months. Also, office expenditure will be made only in committed liabilities while payment of arrears will be postponed. However, outsourced staff and casual staff will be paid their wages.
“The need for higher expenditure and economic package has arised due to Covid-19 outbreak and lockdown. The government is also looking at avenues where it could cut expenses to keep adequate funds for contingencies,” said a source in the government.
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As part of the austerity drive, the Centre on Thursday announced suspension of DA hike for the central employees till July 2021. Moreover, ministries and department have also been categorised for fixing a cap on their quarterly expenditure, limiting it to 15-20 per cent of the annual budget expenditure for FY21 in the first quarter.
The departments that have been asked to restrict the overall expenditure within 15 per cent of BE in Q1 included commerce, industry, telecom, defence (civil), housing & urban affairs, school & higher education, water resources, drinking water, labour, MSME and skill development.
The departments that will have to contain expenditure at 20 per cent included fertilisers, posts, pension, defence services (revenue, capital & pension), financial services, revenue, roads and petroleum.
But the Finance Ministry has spared from expenditure compression measure some of the key ministries that are crucial in the fight against coronavirus such as health, agriculture, food, consumer affairs, rural development, railways and textiles.
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