Government changes expenditure pattern for Q1 FY20-21, categorises ministerial departments

New Delhi: The central government on Wednesday (April 8) decided to change its expenditure pattern, and the Ministry of Finance made categories of ministries as A, B, C for their departments amid the outbreak of coronavirus COVID-19 pandemic, said a government statement.

The Finance Ministry has come out with a guideline in this regard. Under the guidelines, the government will control its expenditure in the first quarter (April to June 2020) of this financial year.

Under A category, the departments will be authorised to spend money allocated in the budget. This includes Agriculture, Yoga, Health, Civil Aviation, Consumer Affairs, Food, Railway and Rural ministry.

Under B category, these departments will have to curtail their expenditure by 20%, and they are: agriculture research, fertilizer, defence, tax, police, petroleum, road transport etc.

The departments under C category have to spend merely 15% of their allocated amount in the first quarter. It includes Chemical, Coal, Corporate Affairs, Civil Defense, Animal Husbandry, Power, Tourism, and Higher Education.

Notably, major expenditures will be maintained according to the predetermined guidelines.

Meanwhile, the Finance Ministry has allowed all states today to borrow a cumulative Rs 3.20 lakh crore from the market between April-December. The move comes amid states’ demand for higher funds from the Centre to meet the expenses in dealing with COVID-19 pandemic.

In a letter to the RBI, the ministry reportedly stated that the Centre has decided to permit states to raise open market borrowing on the basis of 50 per cent the Net Borrowing Ceiling fixed for the year 2020-21 for financing the states’ annual plan for the fiscal.

As per the letter by the Department of Expenditure to the RBI, 28 states have been allowed to borrow a cumulative Rs 3,20,481 crore from markets on an ad-hoc basis for the first nine months of the current fiscal.

On Tuesday, the Reserve Bank of India permitted state governments and Union territories (UTs) greater flexibility for availing overdraft facilities with immediate effect till September 30.