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Current Affairs

Centre removes curbs on ministry spending

Date: 28 September 2021 Tags: Bills & Laws

Issue

The expenditure curbs imposed on various ministries by the Ministry of Finance during July-September quarter has been removed.

 

Background

The economic losses occurring due to nation-wide lockdown had forced the government to issue diktat on spending by various ministries.

 

Details

  • The revenues have been increasing and recovery is strengthening. This has been witnessed in form of high GST collection.

  • Earlier various ministries and departments were asked to restrict the overall expenditure within 20 per cent of BE 2020-21 to manage the cash crunch.

  • The restrictions were not imposed on ministries such as health, agriculture, rural development, railways, MSME (micro, small and medium enterprises).

  • Curbs were put on ministries such as civil aviation, home, telecom and post, labour, mines, revenue, consumer affairs, power, fisheries, economic affairs, financial services and heavy industries. They fall under category B of Finance Ministry guidelines.

  • Under the updated guidelines, the ministries and departments are now free to spend money as per their approved monthly and quarterly expenditure plan.

 

Reason for removal

  • The tax revenues of the government picked up. From the past 11 months, the GST collection is above 1 lakh crore mark.

  • The direct collection has been 47% more than the collections recorded last year. It has even surpassed the collections of 2019-20 financial years with a growth of 16.75%.

 

The impact

  • To sustain the recovery, the government will have to make capital expenditure. The industrial output had witnessed a sharp dip last year, which needs to be reversed.

  • The government’s capital spending has been the main reason for GDP witnessing a 20.1% growth over last year. This will also induce economic demands.