Finance Ministry Eases Rules For Rs 500 Crore+ Expenses To Boost Capex In Current Fiscal Year

The Ministry of Finance has reportedly relaxed the rules for expenses exceeding Rs 500 crore to boost capital expenditure (Capex). The target for Capex in the current fiscal year is set at Rs 11.11 lakh crore. This decision was reportedly taken to boost government spending. Earlier, several reports suggested that the capital expenditure have slowed down for a few months due to the general elections.

In the 2024-25 budget, Finance Minister Nirmala Sitharaman proposed increasing the Capex estimate by 11.1 per cent, bringing to a record Rs 11.11 lakh crore. In an official memorandum that was published on September 2, 2024, the ministry mentioned that to facilitate the smooth implementation of the budget proposals, the decision was taken to relax the rules for releasing amounts above Rs 500 crore for expenditure in the current fiscal year.

The memorandum further stated that this relaxation is subject to strict compliance with the rules for all the ministries and departments. “All expenditures should comply with 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 memorandum read.

According to an earlier memorandum, that was released in May 2022, for the expenditure ranging between Rs 500 crore and Rs 2000 crore, the releases needed to be prepared before, to facilitate tracking of expenses and cash flow.

On Tuesday, Finance Minister Nirmala Sitharaman instructed all the ministries to prepare quarterly targets for Capex. She also emphasised the need to boost government spending in the remaining months of the year. In a statement, the Ministry officials stated that during a review meeting of Capex for the Ministry of Road Transport and Highways (MoRTH) and the Department of Telecommunication (DoT), Minister Nirmala Sitharaman requested the ministers of the respective departments to expedite this implementation. The drop in Capex has been cited as the main reason for the recent slowdown in GDP growth, prompting the government to increase its expenditure efforts.