Covid-19 crisis: No new scheme for a year as govt tightens purse strings

The Union finance ministry has put the brakes on the implementation of new schemes other than those announced in the Rs 20-trillion package to revive the economy and help vulnerable sections amid the Covid-19 crisis. 

New schemes, up to Rs 500 crore, which have already been appraised by the departments and ministries, would also be suspended in the current financial year. 

These schemes would also include those which have been given in-principle approval. 

The financial advisors of the departments have been asked to send a list of these schemes to the department of expenditure under the finance ministry by June 30.  

No funds would be released for these schemes. These are small schemes in value. For instance, none of the 20 schemes listed in the annexure of the Budget speech for 2020-21 comes under this.   

The smallest of these schemes — National Ganga Plan — was allocated Rs 800 crore for 2020-21 by the Budget.  The finance ministry has already given interim approval for continuation of the existing schemes for 2020-21. However, this would be subject to the assessment of the resource position of the exchequer after the acceptance of the recommendations of the 15th Finance Commission later this year. 

In April, the government had announced curbs on spending in the first quarter. First-quarter spending by most ministries and departments was restricted to 15-20 per cent. The Centre had also decided to freeze any hike in dearness allowance for government employees in April. It froze DA for its 4.8 million employees and 6.5 million pensioners at 17 per cent till July 1, 2021, to partly offset the increase in spending on health in light of the coronavirus disease (Covid-19) crisis. This would save the Centre over Rs 37,000 crore, and if states follow suit, the combined savings would be Rs 1.2 trillion.

Last month, the government had announced Rs 20-trillion package, but, according to experts, the hit to the exchequer was just over Rs 2 trillion. 

The government has pegged its expenditure at Rs 30.4 trillion for 2020-21, around 13 per cent higher than Rs 26.9 trillion incurred in the previous financial year.  

However, these numbers would see vast changes after the outbreak of Covid-19 in India. The government has already planned Rs 4.2 trillion extra borrowings to Rs 12 trillion in the current financial year.