Cash Management System in Central Government – Guidelines for expenditure control in Q2

Cash Management System in Central Government – Guidelines for expenditure control in Q2 (July, 2020 to September, 2020)

F.No.12(15)-B(W&M)/2020
Ministry of Finance
Department of Economic Affairs
( Budget Division)
*******

New Delhi, 23rd June, 2020.

OFFICE MEMORANDUM

Subject : Cash Management System in Central Government – Guidelines for expenditure control in Q2 (July, 2020 to September, 2020).

Attention of Ministries/Departments is drawn to this Ministry’s O.M. issued under F.Nos 15(39} -B(R)/ 2016 dated 21.8.2017 and of even number dated 8.4.2020 regarding modified exchequer control based expenditure management under Cash Management System in Central Government.

2. Considering the need to effectively manage the cash flows of the Government, it has been decided to retain and continue with the same expenditure management measures in Q2, as was applicable for Q1 of FY 2020-21.For Q2 of FY 2020-21, i.e. July, 2020 to Sept ember, 2020, the following guidelines are additionally being stipulated:

(i) All Grants/Appropriations shall continue to be classified as per categories ‘A’, ‘B’ and ‘C’ given in the O.M . of 8th April 2020. Quarterly Expenditure Plans (QEP) for Q2 of the Ministries/ Departments shall be governed by the ceilings mentioned therein;

(ii) Monthly Expenditure Plan (MEP) for July, August and September will mirror the MEP stipulation that were spelt out for April, May and June 2020;

(iii) Expenditure on ‘salaries ‘ and ‘pensions’ will be as per actual requirement and shall be within the overall limits prescribed under cash management guidelines;

(iv) The amounts that remained unspent in a month will not be available for automatic carry-forward into the next month. The amounts that remained unspent in a Quarter will not be available for automatic carry -forward into the next Quarter . Specific approvals of Secretary, Department of Expenditure shall be obtained by the Ministries/Departments for utilising these unspent amounts; and

(v) Ministries/Departments while utilising their allocations shall take utmost care not to bunch up expenditures/releases in a bid to improve their pace of expenditure leading to parking of funds. In this time of acute cash stress, utmost care may be taken to avoid releases that can contribute to idle parking of funds.

3. This has the approval of Secretary, Department of Expenditure.

(Vyasan R)
Deputy Secretary (Budget)

Cabinet Secretary, Government of India; Comptroller & Auditor
General of India; Secretaries of all Ministries/Departments;
Secretary (Defence Finance), Ministry of Defence ; Financial
Commissioner, Ministry of Railways;
Member {Finance), Department of Telecommunications;
Controller General of Account s, Ministry of Finance,
Department of Expenditure; and
Financial Advisers/ Pr.CCAs/ CCAs of all Ministries/ Departments.

F.No.12(13)-B(W&M)/2020
Ministry of Finance
Department of Economic Affairs
( Budget Division )

New Delhi, 8th April, 2020.

OFFICE MEMORANDUM

Subject : Cash Management System in Central Government – Modified Exchequer Control Based Expenditure Management.

Attention of Ministries/Departments is drawn to this Ministry’s O.M. issued under F.No.15{39 )-B(R)/ 2016 dated 21.8.2017 regarding modified exchequer control based expenditure management under Cash Management System in Central Government.

2. The existing guidelines for expenditure control have been reviewed. Keeping in view the present situation arising out of COVID-19 and the consequential lockdown, it is expected that the cash position of Government may be stressed in Q1 (April to June, 2020) of 2020-2021. Considering this, it is essential to regulate the Government expenditure and to fix the Quarterly Expenditure Plan (QEP)/ Monthly Expenditure Plan (MEP) of specific Ministries/ Departments in the following manner.

(i) Category A: Ministries/ Departments of the following Demands/ Appropriations will be governed by the extant MEP/ QEP guidelines –

(a) Demand No.1 – Department of Agriculture , Cooperation and Farmers’ Welfare;
(b) Dem and No.4 – Ministry of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy;
(c) Demand No.7 – Department of Pharmaceuticals;
(d) Demand No.8 – Ministry of Civil Aviation;
(e) Demand No.14 – Department of Consumer Affairs;
(f) Demand No.15 – Department of Food & Public Distribution;
(g) Appropriation No.35 – Interest Payments;
(h) Demand No.38 – Transfers to States;
(i) Demand No.42 – Department of Health and Family Welfare;
(j) Demand No.43 – Department of Health Research;
(k) Appropriation No.66 – Supreme Court of India;
(I) Appropriation No.74 – Central Vigilance Commission;
(m) Appropriation No.78 – Staff, Household and Allowances of the President; (n) Appropriation No.82 – Union Public Service Commission; Demand
(o) No.83 – Ministry of Railways;
(p) Demand No.85 – Department of Rural Development; and Demand
(q) No.97 – Ministry of Textiles.

(ii) Category B: Ministries/ Departments of the following Demands will require to restrict the overall expenditure within 20% of BE 2020-2021 in Quarter 1 (April to June, 2020) –

(a) Demand No.2 – Department of Agricultural Research and Education;
(b) Demand No.6 – Department of Fertilizers;
(c) Demand No.12 – Department of Post s;
(d) Demand No. 19 – Defence Services (Revenue);
(e) Demand No.20 – Capital Outlay on Defence Services;
(f) Demand No.21- Defence Pensions;
(g) Demand No.26 – Ministry of External Affairs;
(h) Demand No.29 – Department of Financial Services;
(i) Demand No.31 – Depart men t of Revenue;
(j) Demand No.32 – Direct Taxes;
(k) Demand No.33 – Indirect Taxes;
(I) Demand No.34 – Indian Audit and Accounts Department;
(m) Demand No.37 – Pensions;
(n) Demand No.38 – Department of Expenditure;
(o) Demand No.46 – Ministry of Home Affairs;
(p) Demand No.47 – Cabinet;
(q) Demand No.48 – Police;
(r) Demand No.49 -Andaman and Nicobar Islands;
(s) Demand No.SO – Chandigarh;
(t) Demand No.51 – Dadra and Nagar Haveli and Daman and Diu;
(u) Demand No.52 – Ladakh;
(v) Demand No. 53 – Lakshadweep;
(w) Demand No.54 – Transfers to Delhi;
(x) Demand No.55 – Transfers to Jam mu and Kashmir;
(y) Demand No.56 -Transfers to Puducherry ;
(z) Demand No.65 – Elect ion Commission;
(aa) Demand No.75 – Ministry of Petroleum and Natural Gas;
(bb) Demand No.79 – Lok Sabha;
(cc) Demand No.80 – Rajya Sabha;
(dd} Demand No.81- Secretariat of Vice President;
(ee) Demand No.84- Ministry of Road Transport and Highways;

Note : The monthly expenditure may be kept at 8% of BE 2020 -2021 for the first month and at 6% each of BE 2020-2021 for the last two (2) months of Quarter 1 (April to June, 2020}.

(iii) Category C: Ministries/Department s of the following Demands will require to restrict the overall expenditure within 15% of BE 2020-2021 in Quarter 1 (April to June, 2021) –

(a) Demand No.3 -Atomic Energy;
{b} Demand No.5 Department of Chemicals and Petrochemicals;
(c) Demand No.9 – Ministry of Coal;
(d) Demand No.10 – Department of Commerce;
(e) Demand No.11 – Department for Promotion of Industry and Internal Trade;
(f) Demand No.13 – Department of Telecommunications;
(g) Demand No.16 – Ministry of Corporate Affairs;
(h) Demand No.17 – Ministry of Culture ;
(i) Demand No.18 – Ministry of Defence (Civil};
(j) Demand No.22 – Ministry of Development of North Eastern Region;
(k) Demand No.23 – Ministry of Earth Sciences;
(I) Demand No.24 – Ministry of Electronics and Information Technology;
(m) Demand No.25 – Ministry of Environment , Forests and Climate Change; (n) Demand No.27 – Department of Economic Affairs;
(o) Demand No.30 – Department of Investment and Public Asset Management;
(p) Demand No.39 – Department of Fisheries ;
(q) Demand No.40 – Department of Animal Husbandry and Dairying;
(r) Demand No.41 – Ministry of Food Processing Industries;
(s) Demand No.44 – Department Heavy Industry ;
(t) Demand No.45 – Department of Public Enterprises;
(u) Demand No.57 – Ministry of Housing and Urban Affairs;
(v) Demand No.58 – Department of School Education and Literacy;
(w) Demand No.59 – Department of Higher Education;
(x) Demand No.60 – Ministry of Information and Broadcasting;
(y) Demand No.61 – Department of Water Resources, River Development and Ganga Rejuvenation;
(z) Demand No.62 – Department of Drinking Water and Sanitation;
(aa) Demand No.63 – Ministry of Labour and Employment;
(bb) Demand No.64 – Law and Justice;
(cc)Demand No.67 – Ministry of Micro, Small and Medium Enterprises;
(dd) Demand No.68 – Ministry of Mines;
(ee) Demand No.69 – Ministry of Minority Affairs;
(ff) Demand No.70 – Ministry of New and Renewable Energy;
(gg) Demand No.71 – Ministry of Panchayati Raj;
(hh) Demand No.72 – Ministry of Parliamentary Affairs
(ii) Demand No.73 – Ministry of Personnel, Public Grievances and Pensions; (jj) Demand No.76 – Ministry of Planning;
(kk) Demand No.77 – Ministry of Power;
(II) Demand No.86 – Department of Land Resources;
(mm) Demand No.87 – Department of Science and Technology;
(nn) Demand No.88 – Department of Biotechnology;
(oo) Demand No.89 – Department of Scientific and Industrial Research;
(pp) Demand No.90 – Ministry of Shipping;
(qq) Demand No.91 – Ministry of Skill Development and Entrepreneurship; (rr) Demand No.92 – Department of Social Justice and Empowerment;
(ss) Demand No.93 – Department of Empowerment of Persons with Disabilities; (tt) Demand No.94 – Department of Space;
{uu) Demand No.95 – Ministry of Statistics and Programme Implementation; (vv) Demand No.96 – Ministry of Steel;
(ww) Demand No.98 – Ministry of Tourism;
{xx) Demand No.99 – Ministry of Tribal Affairs
(yy) Demand No.100 – Ministry of Women and Child Development; and
(zz) Demand No.101- Ministry of Youth Affairs and Sports.

Note : The monthly expenditure may be kept at 5% each of BE 2020 – 2021 during Quarter 1.

4. Items of large expenditure would continue to be governed by the guidelines issued by this Ministry’s O.M F.No .12(39}- B(R)/ 2016 dated 21.8.2017. Ministries/ Department s are advised to observe the guidelines strictly and regulate the expenditure accordingly in the current fiscal. Any deviation from this guideline would require prior approval from Ministry of Finance.

5. This issues with the approval of Secretary, Department of Expenditure.

(Vyasan.R)
Deputy Secretary (Budget)

Cabinet Secretary, Government of India;
Comptroller & Auditor General of India;
Secretaries of all Ministries/Departments;
Secretary (Defence Services), Ministry of Defence;
Financial Commissioner, Ministry of Railways;
Member (Finance), Department of Telecommunications ;
Controller General of Account s, Ministry of Finance, Department of Expenditure; and
Financial Advisers / Pr.CCAs / CCAs of all Ministries/ Departments.

F.No.15 (39)-B(R)/2016
Government of India
Ministry of Finance.
Department of Economic Affairs (Budget Division)
****

Dated Aug 21, 2017

Office Memorandum

Sub: Cash Management System in Central Government – Modified Exchequer Control Based – Expenditure Management

1. This OM is issued in supersession of following OMs: –

F.NO. 4(10)-W&M/2016 dated August 4, 2016
F. No. 21 (1)-PD/2005 dated December 27, 2006
F. No. 21 (1)-PD/2005-Vol 11 dated July 30, 2012
F. No. 21 {1)-PD/2005 dated January 15, 2013
F. No. 21 (1)-PD/2005 dated July 3, 2013
F. No. 21 (1)-PD/2005 dated January 10, 2014
F. No. 21 (1)-B(PD)/2014 dated July 22, 2015

2. To bring about more effectiveness and efficiency in cash management system, a Cash Co-ordination Committee (CCC) headed by JS (Budget) with members from office of CGA, RBI and Budget Division was constituted by the Government on 19.05.2016 vide OM dated 19.5.2016.

3. Based on the deliberations of the Committee, consultation with Financial Advisors of some key Ministries representing infrastructure, Social, and economic Sector was under-taken. Inputs from 0/o Controller General of Accounts were also sought. Accordingly, guidelines for more effective and efficient cash and expenditure management in the Government of India have been prepared and outlined here. This will help avert situation of temporary mismatches in cash outflows and cash inflows, and thereby prevent additional transitory borrowing through treasury bills/CMBs and thereby help save on interest expenses. It would also prevent unnecessary build-up of cash, which creates liquidity crunch in the economy and in process again raises cost of Government borrowing.

4. Accordingly, the following guidelines are hereby notified:

(i) All FAs shall ensure that Monthly/Quarterly Expenditure Plan (MEP/QE_P) of respective Ministries are prepared and sent to Budget Division, DEA, Ministry of Finance within two weeks of passing of their Detailed Demand for Grants (DOG) in Parliament. MEP/ QEP would be worked out and included as Annex to the DOG in respect of the concerned Demand for Grants (DG). MEP/ QEP form the basis of cash forecast and preparation of indicative calendar for Government borrowings. Deviations from MEP/ QEP may result Into distortions in the cash planning by GOI with multiple negative implications including Increased cost of borrowing and hence would be viewed seriously.•

(ii) The MEP would form the basis of QEP and Ministries/ Departments concerned will not be allowed to release payments beyond QEP (equal to sum of MEPs within that quarter) without prior consent of Budget Division. Practice of expenditure beyond QEP without prior approval of Secretary (Expenditure) would be viewed adversely. No ex-post facto approval for the deviations from the approved QEP shall be normally considered.

(iii) MEP/QEP may accordingly be prepared, with due diligence by factoring the overall trend of expenditure, seasonality of specific expenditure items, and the following broad principles:

a. To the extent possible, the bulk expenditure items of more than Rs/- 2000 crore may be timed in the last month of each quarter to utilize the direct tax receipt inflows in June, September, December, and March. The releases may be kept within 17th (or next working day if 17th is a holiday) and 25th (or next working day if 25th is a holiday) in these months.

b. Within the MEP/QEP, a calendar of big releases of Rs/- 200 crore to to Rs/- 2000 crore shall be prepared to build certainty in cash outflows, as far as possible. The range of dates of such releases may be kept between 21st (or next working day if 21st is a holiday) and 25th (or next working day if 25th is a holiday) of a month to take advantage of the GST (excise duty and service tax) inflows.

c. The dates for these major expenditure of > Rs/- 200 crore shall be annexed the the MEP/QEP.

d. As at present, Salary would be released on last working day of each month.

e. In case a major expenditure of more than 200 crore and above needs to be released outside these dates, prior approval with two working days’ notice, shall be taken from Budget Division which shall, depending on cash position, convey acceptance (through fax or email) cc suggest another appropriate date for such release: In case of any exigency, if so made out, the permission shall be given on same day.

f. Prior permission from Budget Division shall be a per-requisite for any single payment release in excess of Rs/- 5000 crore. The FAs may guard against attempts to deliberately split expenditure to stay within limits.

(g). Not more than 33% and 15% of expenditure of Budget Estimates shall be permissible respectively in the last quarter and last month of the financial year. The restriction shall be observed both scheme-wise as well as for the Demand for Grants as a whole.

(h) The FAs will monitor the release of funds to autonomous bodies and other organizations to ensure that there is no undue build-up of funds with such bodies/ organizations and money is released to them just in time.

(IV) The exchequer control would apply cumulatively at the Demand for Grant (DG) level only i.e. lnter-se variations between months within a quarter would be permissible, subject to statutory restrictions and guidelines in this regard.

(v) The relaxation In the QEP and carry forward of the unspent amount across quarters may be exception rather than norm. While seeking such relaxations, detailed justification for the deviations shall be recorded. The generic reasons such as ‘delays in sanction order’, ‘late receipt of claims’, delays in necessary approvals’ shall not be accepted unless substantiated by specific reasons.-

(vi) Savings, if any, Incurred during QEP would not be available for automatic carry forward to the next quarter, without re validation of such savings by the Budget Division for the next quarter through modification in QEP. However, spillover in MEP, not inconsistent with QEP will not require prior re-validation from the Budget Division. The FAs may nonetheless use such MEPs for their internal monitoring with the target of complying by the QEP limits.

(vii) The Budget Division would convey its decision on re-validation of QEP, within 7 days of the request, unless there are some specific queries.

(viii) The provisions stipulated under Rule 209 (6) (iii) of GFR shall be strictly complied by all Ministries/Departments and accordingly, the releases to the various Implementing Agencies (IAs) have to be restricted / rationalized keeping in view the unspent balances lying with the IAs. For this purpose, the Programme Division of Ministries/Departments shall take help of PFMS Portal to know the bank balance of the recipients (IAs) before making every fresh release. The instructions of Department of Expenditure regarding the use of PFMS Portal for Central Sector Schemes issued vide F.No. 66 (29) PF-11/2016 dated 1S-07-2016 shall be strictly followed by all Ministries/Departments. It is learnt that D/o Controller General of Accounts has been making efforts to extend the PFMS portal to all types of payments. Accordingly, the same principles of ‘just in time release’ should be applied for releases in respect of an payments to the extent possible.

(ix) The releases to any Implementing Agencies (IA), including an Autonomous body, shall be on monthly basis, rather than in an ad-hoc manner, to avoid any avoidable parking of funds.

(x) Financial Advisers shall review and freeze the timing of the receipts of Dividend and various other Non-Tax receipts (NTRs) of their respective Ministry/Departments. The dividend payments and buy back considerations would be targeted in the H1 part of financial year. The FAs shall also monitor the timely realization of other NTR and submit collection details of other NTR through the online portal ‘Bharat Kosh’ developed by CGA.

(xi) Each Ministry/ Department would Indicate month-wise estimate of the possible non tax revenue inflows concerning that Ministry/ Department to Budget Division, while communicating their MEP/QEP, so that these inflows are factored in while according permission for expenditure. In case month-wise estimate Is not feasible, such information would be provided on quarterly basis.

This Issues with the approval of Finance Minister

(Prashant Goyal)
Joint Secretary (Budget)

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