Govt extends relaxations for central ministries on capital expenditure

In order to push capital expenditure by central ministries, the Finance Ministry on Friday extended the relaxed norms on capex in excess of Rs 500 crore to the second quarter of this fiscal.

As per the office memorandum dated April 25, 2023, the finance ministry had removed all restrictions and conditions on capital expenditure by ministries, under the centrally sponsored schemes (CSS) and grants-in-aid for the creation of capital assets for the first quarter of the current financial year.

It has been decided to continue relaxation for the second quarter of the current financial year, the finance ministry said on Friday.

"For subsequent quarters, a separate advisory will be issued before the commencement of the quarter. It further reiterated that the relaxation will be subject to strict adherence to the Single Nodal Agency (SNA) and Central Nodal Agency (CNA) guidelines issued by the Department of Expenditure," it said.

Usually, ministries and departments are allowed to spend 25 per cent of their budget in each quarter. However, such spending is slower than the permitted limit in the first and second quarters due to various conditions.

According to cash management guidelines, ministries have to attune bulk expenditure items to monthly Goods and Services Tax (GST) collections and quarterly advance tax payments for smooth exchequer control.

Finance Minister Nirmala Sitharaman in her Budget announced a 33 per cent increase in capital expenditure outlay to Rs 10 lakh crore for the financial year 2023-24.

This is 3.3 per cent of the GDP.