GOVT LIFTS EXPENDITURE CURBS ON SELECT MINISTRIES DEPARTMENTS

NEW DELHI: The government on Friday lifted expenditure curbs on ministries and departments amid robust revenue collections, and allowed them to front-load public spending in order to boost the economy. The Union finance ministry had imposed the curbs in June to prioritise the government’s cash flow after the second wave of Covid-19 pandemic.

The finance ministry issued an order on Friday, withdrawing restrictions capping expenditure maximum 20% of the budget estimates in the second quarter (July-september) with immediate effect. The order allows ministries and departments to spend the entire amount of their approved monthly expenditure starting immediately. The government’s spending contracted by 5% in the first quarter of the year (April-july). Analysts expect the withdrawal of curbs to accelerate government spending, and consequently growth, in the remaining part of 2021-22.

The move comes at a time when net direct tax collections in the current financial year (up to Sept 22) saw annualised growth of 74.4% at ₹5.70 lakh crore, which is also 27% higher than ₹4.49 lakh crore collected in 2019-20, according to latest data issued by the finance ministry.

Indirect tax collections, a weathervane of economic health, also jumped over ₹1 lakh crore in two consecutive months (July and August) after plunging below the benchmark in June (₹92,849 crore) because of the second wave that hit India in April and May this year. The June collection figure indicates the volume of business transactions that took place in May.