Adhere to spending cap in March: FinMin to ministries

Regular sanctions and bills should be put on the PFMS portal by March 20, says Finance Ministry

The Finance Ministry has asked other ministries not to breach financial propriety and restrict expenditure to 15 per cent ceiling in March to avoid expenditure rush in the last month of the financial year.

With three weeks left for the end of the current financial year, the ministry has asked various government departments and ministries, which are not on the Public Financial Management System (PFMS) portal, to update it about their expenditure and revenue collections on a daily basis.

Regular sanctions and bills should be put on the PFMS portal by March 20, the Finance Ministry said, adding only "very few" expenditure requests would be processed after that.

The PFMS, also known as Central Plan Scheme Monitoring System (CPSMS), tracks fund disbursement and ensures that state treasuries are integrated with the Centre for smooth fund flow.

An office memorandum, which specifies that total expenditure be restricted to 33 per cent in the January-March quarter and 15 per cent in the month of March, said that there should be "no breach of financial propriety".

The Expenditure Department of the Finance Ministry has to monitor the actual receipts and expenditure vis-a-vis the budget estimate of 2016-17 and provide flash figures to the Budget division on a daily basis from March 1 to March 31.

"In order to facilitate this exercise, it has been decided that Ministries/Departments/Union Territories without legislature, who are still not on PFMS need to provide their receipts or expenditure... On same day," the expenditure department said in a communication.

It has also asked the CBDT and CBEC to update the daily tax collection figures to the expenditure department.

The fiscal deficit, the difference between government expenditure and revenue collection, shot up to Rs 5.64 lakh crore, or 105.7 per cent of the full-year target, at the end of January.

The government had budgeted a fiscal deficit of Rs 5.33 lakh crore or 3.5 per cent of GDP for the current fiscal ending March.

The government, by limiting expenditure to bare minimum, hopes to retain fiscal deficit at the budgeted level of 3.5 per cent in the financial year.

"The last quarter expenditure must be limited to actual procurement of goods and services and reimbursement of expenditure already occurred," the Ministry said.

The Comptroller and Auditor General (CAG) had in the past observed that there is a huge rush of expenditure by the central government ministries during the last quarter of the financial year and in particular the last month of the financial year.

The General Financial Rules (GFR) states that rush of expenditure particularly in the closing months of financial year shall be regarded as a breach of financial propriety and shall be avoided.