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Finance Ministry Issues Relaxation In Norms For Expenses Over Rs 500 Crore To Boost Capex

In an office memorandum dated September 2, 2024 the ministry said that it is issuing the new norms for big releases over Rs 500 crore for all expenditure items in the current fiscal year

The Finance Ministry issued a relaxation in the norms for expenditure surpassing Rs 500 crore to help boost the capital expenditure (capex) which is set at Rs 11.11 lakh crore for the current 2024-25 fiscal year (FY25). The revisions in the norms would help boost government spending which has been weakened in the recent months owing to general elections. 

In an office memorandum dated September 2, 2024 the ministry said that it is issuing the new norms for big releases over Rs 500 crore for all expenditure items in the current fiscal year. This relaxation has been implemented to help the authorities achieve the proposals stated in the Budget smoothly, reported PTI.

Notably, the Finance Minister, Nirmala Sitharaman, in her Budget presentation said that capital expenditure target should be increased by 11.1 per cent to touch Rs 11.11 lakh crore in the current fiscal year.

The ease in the norms however remains subject to strict compliance by all ministries and departments, the authorities noted. “All expenditures should be in compliance of the guidelines of the Single Nodal Agency (SNA)/Central Nodal Agency (CNA) and Monthly Expenditure Plan (MEP) and Quarterly Expenditure Plan (QEP) ceiling prepared by ministries for both scheme and non-scheme expenditure,” the order read.

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An earlier memorandum, dated May 2022, stated that for expenditure ranging between Rs 500 crore and Rs 2,000 crore, the release needed to be prepared to allow the expense and cash flow to be tracked. These releases were typically dates between the 21st and 25th of each month to benefit from the Goods and Services Tax (GST) inflows.

The order also noted that bulk expenditure items worth more than Rs 2,000 crore were to be timed during the second half of the last month of the quarter to avail of direct tax receipts inflow. The new order now calls for a curb on these conditions.

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