Lok Sabha Question No. 1767 (UNSTARRED), answered on 2020-03-02
Subject: Fiscal Deficit
Ministry: FINANCE
Asked by: H. Vasanthakumar

## Govemment of India Ministry of Finance Department of Economic  Affairs

## LOK SABHA

I.INSTARRED  QUESTION  NO. 1 767 ANSWERED ON  -  02.03.2020

## FISCAL DEFICIT

## 1767. SHRI VASANTHAKUMARH:

Will the Minister of FINANCE  be pleased  to state:

- (a) whether the Government has taken any action against fiscal deficit  during  economic slow down and if so, the details  thereof;
- O) whether the expenditure  is higher than its revenue and if so, the details thereof along with the steps being taken  by the Govemment  in this regard;  and
- (c) the manner  in which  the Govemment deficit  is mainly measured?

## AIISWER

## MINISTER OF STATE FOR FINANCE (SHRI ANURAG  SINGH THAKUR)

- (a) During economic  slowdown,  the Govemment  has restricted  its Fiscal Deficit to 3.8 per cent ofGDP  for RE 2019-20  and 3.5 per cent ofGDP for BE 2020-21.
- O) As per the provisional unaudited Statement  of Monthly Accounts for the Month of December, 2019, the Total Expenditure  is greater  than Total Non-Debt  Receipts  by  -9,31,725 crore. Details may be seen in Annex-L  Govemment  has issued guidelines for expenditure management  in the last quarter/month of fiscal year 2019-20  (Annex-II).
- (c)  Fiscal Deficit, defined  as  "fiscal  deJicit means the excess  of total disbursements,  from  the Consolidated Fund of India, excluding repayment  of debt, over total receipts into the Fund, the debt receipts), durtng a  fnancial  yeai' (As per Section  2(a) of the Fiscal responsibility and Budget  Management  Act, 2003) is used for measuring  Government  Deficit.

## Govemment  of India Union Govemment  Accormts as at the end of Decembeq  20 I 9

| S. No.   | Items                      | BE20t9-20   | RE 2019-20   | Upto December 2019   |
|----------|----------------------------|-------------|--------------|----------------------|
| 1        | Revenue Receipts           | 19,62,761   | 1850,101     | 11,46,897            |
| 2        | Tax Revenue (Net)          | 16,49,582   | t5,04,587    | 9,04,944             |
| J        | Non-Tax Revenue            | 3,t3,t79    | 3,45,514     | 2,41,953             |
| 4        | Non-Debt Capital Receipts  | 1,19,828    | 81,605       | 31,025               |
| 5        | Recoverv of Loans          | 14,828      | 16,605       | 12,92s               |
| 6        | Other Receipts             | 1,05,000    | 65 000       | 18 100               |
| 7        | Total Receipts (1+4)       | 20,92,599   | 1931,706     | 11,77,922            |
| 8        | Revenue Expenditure        | 24,47,780   | 23,49,645    | 18,54,125            |
| 9        | of which Interest Payments | 6,60,471    | 6,25,105     | 4,24,3t4             |
| 10       | Capital Expenditurr        | 3,38,569    | 3,48,907     | I << <r1             |
| 12       | Total Expenditure (8+10)   | 27,86349    | 26,99,552    | 21,09..647           |
| tJ       | Fiscal Deficit (12-7)      | 7,03,760    | 7,66,.946    | 931,725              |

Source:  t. Union Budget zozo-zt

2. htto://cgaric.W

Subject:

## F.No.12(1s)-B(w&M)/2019 Minittry  of Finance Department  of Economic Affai rs I  Eudget  Division  I

## OFFICE  MEMORANDIIM

Cash Management  System  in Ceitral Government ' Guidelines for ExPenditure Management in the last quartel/month of current fiscalrriz. 201,9-2020.

The undersigned  is directed  to invite a reference to this Ministry's O.M. issued under  F. N o.15{39)-B(R)/2016  dated 23..8.20L7  (copy enclosed for  ready reference) regarding  modified exchequer control based expenditure  management under  Cash Manatement System in Central  6overnment  and to state that the existing guidelines  for expenditure control have been reviewed.  Considering the fiscal position of the Government in the current financial year, it has been decided to €ap  the expenditure  in the last quarter/last  month of the curreht financial  year viz 2019-20 as ind icated below:

| Expenditure during -       | Existing criteria   | Revised criteria for 2019-20   |
|----------------------------|---------------------|--------------------------------|
| Last quarter (Jan-Mar)     | 33% of BE           | 25% of BE                      |
| Last Month (March)         | l5o/o of BE         | LO% af BE                      |
| Balance oeriod {Jan & Feb} | 18% of BE           | 1"5% of gE                     |

2. For further clarity in regulating the expenditure, the following  guidelines for incurring expenditure in the last quarter/last  month of current financial  year (20192020) are issued:
2. (i) Expenditure  in the last quarter  2019-20 is to be restricted to 25% of BE;'
3. (iii) ln case of reduction  in expenditur€  ceiling in RE vis-a-vis  BE, the expenditure should be restricted  to ceiling  indicated in RE;
4. (ii) Expenditure in the last month of current financial year should not be more tha n 10% BE;
5. (iv) ln case of any expenditure  (through  re-allocation  of savings within the Grant) requiring  prior approval of Parliament,  expenditure may be incurred  only after obtaining  the approval of Parliament through Supplementary  Demands for Grants; and
6. (v) ln case of additionality  agreed in RE, any additional  expenditure may be incurred  after having  obtained the approval  of Parliament.
3. M in istries/Depa  rtments are requested to observe the above guidelines .strictly and regulate the expenditure  accordingly in the current financialyear. lt€ms  of large  expenditure would continue to be governed by the guidelines issued  vide this o.M. dated  Z\.9-,?Af7

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4. This issues  with the approva I of Secretary, artment  of Expenditure

,z\\1

Raiat r Mishra  ) .Joint Secretary  {Eudget)

New Delhi, 27rh  December, 2dl9.

## F.No.1s(3e)-B(R)/2016 6overnment  of lndia Ministry of Finance  . Department  of Econornic  Affairs (BudBel  Division) **,r  i.

## Office Memorandum

Sub: Cash Manat€ment  System in Gntral oovernment  -  Modified Exchequer  Control  Based  Expenditure  Management

- 1
- This  Otvl is issued  in supersession  of following OMs:  -

t.NO. 4(10)-w&M/20X6  dated Algust 4,2016

F. No. 21 (1)-POl2005  dared  Decembet  27,2006

t. No. 21 (1)-P0/2005-Vol ll dated July 30, 2012

F. No. 21 (1)-POl2005  dated ,,anuary.15,  2013

F. No. 21 (1)-PD/2005  dated July 3, 2013

F. No.21  (1)-P0l2005  dated January 10,2014

F.  No.21  (1)-B(PO)/2014  dated July 22,2015

2. fo bring about mole 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 BudSet Oivision  was constituted  by the Government  on 19.05.2016  yide  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 undertaken. lnputs  from  O/o Controller  General  of Accounts  were also sought.  Accordingly,  guidelines  for more effective  and efficient cash and expenditure  rnana8ement in the Government  of lndia nave been prepared  and outlined  here. This will hclp avert situation  of temporary mismatches in cash  outflova  and cash inflows, and thereby prevent additional transitory borrowing  through treasury  bills/ CMBs and thereby help save on interest  erpenses. lt would also prevent unnecessary build-up  of cash, which creates Hquidity  crunsh  in the economy  and in process  again raises cost of Government borrowlng.
4. Accordingly, the following  guidelines  are hereby notified
4. ti) Atl FAs shall ensure thltt Monthly/Quarterly Expenditure  Pl6n  (MEP/QEp)  of r€spective Ministries are prepared and sent to Budget Oivision,  DEA, Ministry of Finaace within two weeks of passing  of their Detailed  Demand  for Grants  (DOG)  in irarliament,  MEP/ qEP  would be worked out and inchded  as Annex to the DDG in respect of the concerned  Oemand  for Grants (DG).  MEP/ QEP form the basis of cash forecast and

Dated Au8 21, 2017

preparation  of indicative calendar  for Government  boffowings.  Devladonr  from MEP/ QEP tnay result lnto dlrtortions ln the csrh phnnlng by Gol whh multlple  nagadv€ implicatlons  includlnt in$eased  Eost of bwrowlng  and hence wouH be vlewed SerioEsly,

- (iil The MEP would form the basis  of QEP and Ministries/  0epartmEnts  concerned will not be allowed to release  payments  b€yofld  qEP  {equal  to sum of MEP3  within that qua.ter) without  prlor  consent of BudBet  Division.  plactlc€  of erpenditure  beyond QEP without  prlor approval  of Secretiry (Exp€rdlture)  gggjgJlEI!  UeeIlge No ex-post  facto approval  for the deviatians  from  tile approved QEP  shall be normally considered,
- liii) MEP/aEP may accordinBly  be prepare4  wlth due diltgence by tactoring  the oyerall trend of expenditure,  seasonality  of specific  expenditure items. and the follcwing broad  p,rinciples:
- a. To the extent  possible,  the bulk expenditure  items  of mole than ?000  crore may be timed in the last mon$r of each  quafier  to utillze the dlrect tax reclpt lniowr in ,une, Septembgr,  December,  aod t\,tarch.  The releas€s  may.be  kept within lzt (or next worklng  day if lll is a holiday).and Z5rh  (or  next worklng diy.if  2S$ i5  1 holiday) ln these  months.
- b. Withh the MEP/qEP,  a calendar of blg releases  of ?i00 crore  to t1000  crore rhall be prepared to build certainty  ln cash outflows,  es fur as possibl€.  The re!tse of dates of suqh releases may be kept between 21st (or next workhg day lf Zlst b a holiday) and 25th  {or  next  working d6y if 25ti is a holiday)  of a mohth  to ttke advantage of the GST (excise  duty and s.rvice tax) lnffows.
- The dates for these major  expendlture  of z ?zo0 crore shall be annexed  to the MEP/QEP. c
- d. As at prerent, Salary  would be released or last working day of each mofith.
- e. ln case a major  expenditure of more than T2@ crore end abovr needs  to b€ released outside  these dates,  lrrlor  approval wlth two workir€  days' noticq,  shall be taken from Budget  Division whlch  shall, depending on cash  positlon,  corvey ac(eptance (through  fax or emaill or suggest another appropriate date for sudt rehase. ln case of any exigenca,  if 50 made  out. the permlssion  shall be  tlyen  on sane day.

- f. Prl6r permisslon  from Budget Dfuirton ,hall be I  pre-requisite  for any single paTment release  in exaess of tso@ cror€,  The FAs may  Euard  againlt  attempts  to deliberately  split  expendirure ro stay within li;it5.
- g. Not more than 3396, and 1996 of expendhure of Budget Estimates shall be permlssible  resp€ctiv€ly  ln the last quarts and la$ month sf the financial  year, Tte resttlction  shall be ohserved  both scheme-udse  as well as for the Demand forGrants as a whoh.
3. h, The FAs wlll monitor the release  of funds to autonoflous  bodiet and otfier or8anlzatiorB to ensure that therg  is no undue 6vild-up  of runds wlth such bodiesl orEanizatr'ons  and money is relersed  to them  iust  in  time.
4. (fu) The exchequer controi  would apply cumula$vely at the Demsnd for Grant  (DG) level only i.e, inter-se  va-llations  between  months  within a quarter would be  permissiblel subject to sfdtutory restrlcdons  end guldellnes  ifl this regard.
5. (vl The relaxatlon  ln the  qEP  ard carrl forward of the uftspent amorrnt ecroas  qqarters may be exceptior  rdther  than norrn, While seeklng  such relaxatlons,  detailed justification  fgr the deviations  shall  be recorded,  The  generic reasons  luch as 'delays in sanction  order', 'late receipt  of claims',  delays in necessary approvals'  shall not be accepted  unless substantiated  by specific reasons.
6. (vll SavinF, if any, incurred duflng QEP r,vould not be a$allable lor automitic  carry fon ard to tfie next quarter.  wtthout ffirafldetlon  of su€h  savlnts  by the BudFt Divlsbn for the nert  guarter  tlhrougt  modtticatlon  ih QEP. However, spillover  in MEP, not inconsistent with  qEP  will not require  prior revalidation  from the BudEet Sivislon, The FAs may nonethehss  use sqch MEP5  for thelr internal monitorlnt with the target of complying by the OEP limlts.
7. {vlil The Budge!  Divi3lon would convey  itg decislon  on r€validatloa  o, QEP, wlthin  7 day3 of the request, unless  there are some  specifi€  queries
8. (vtll! The prcvislons  stipulated  under  Rule  ?09  (6) (tll)  of GFR  shatl  be sfiictly cofiplied by all Ministrles/Departments  afld lccordingly. the releases to tfie rrarious  lmplemenung Agencies  (lAs)  have to be restricted  I  rationalued  keeping in  ylew  the unrpent balances lylng with the tAs" For this purpose,  the  program  e Divisbn of MininriesloepartmEnt  shall take h€lp  of PFMS Portal to know  the bank bahnce of the reclpients  (lAs! before making  every fresh  rele6se, The instructions  of Oepartment of Expenditure  regarding  the use of PFMS Portal  for Central  S€ctdr Schefiles is'ued vide F.No. 66 (29) PF- /2016  dated r5-Oi-20r0  sha[ be stricdy foflowed by all

Ministries/Departments. lt is learnt that  O/o Controller  6eneral  of Accounts has been making efforts  to extend the PFMS portal to all types of  Payments.  Accordlngly,  the same principtes  of  Just  in tirne lelease' should  be applied for releases in resPect of atl payments to the extent  possible.

- (ix) The releases to any lmplementing  Agencies (lAl, induding  an Autonomgus  body, shall be od monthly barit rether  than in an ad-hoc manner,  to avoid  any avoldable  parklng of fundr.
- (x) Financial  Advisers shail review and freeze  the timing  of the receiptr of Dividend end vaiious  other Non'Tax receipts  (NTRs)  of rhelr respective MinistrylDepartments, The dividend  payments  and buy back cortsiderauons  would be targeted in the H1 part of financial  year.  The FAs shall also monltor the timely realization  of sther NTR and submit collection  detai,s of other NTF through the online  portal'Elrarat Kosh' developed by CGA.
- (xi) Each Ministry/ Department  would  indlcate  month-virise  astimate  of the posslble  nontax revenue  inflows concerning that Ministry/  Department  to Budget  Divlsion,  while communicating  their MEP/QEP,  so that these inflows  are fuctored  ln whlle according permission  for expendittrre. ln case month-wise estlmate  ls not feastble, such lnformation would  be provlded on quarterly basis.

This Issues with the appro\ral  of Finance  Minlster

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Joint ry 6oyal)

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