Big push for capex: Finance Minister Nirmala Sitharaman eases norms for expenditure over Rs 500 cr

This move aims to boost government spending, which had slowed down for a few months due to the general elections.

In the Budget, Finance Minister Nirmala Sitharaman proposed raising the capital expenditure target by 11.1% to a record Rs 11.11 lakh crore for 2024-25.

To provide the necessary flexibility in executing the Budget, it has been decided to relax the rules for major expenditures above Rs 500 crore for all types of spending in the current financial year, according to an office memorandum dated September 2, 2024.

All expenditures must comply with the guidelines of the Single Nodal Agency (SNA)/Central Nodal Agency (CNA) and adhere to the Monthly Expenditure Plan (MEP) and Quarterly Expenditure Plan (QEP) ceilings prepared by ministries for both scheme and non-scheme spending.

Previously, a memorandum from May 2022 required tracking expenditures and cash flow for releases ranging from Rs 500 crore to Rs 2,000 crore, with release dates between the 21st and 25th of each month to align with GST inflows.

Additionally, bulk expenditures over Rs 2,000 crore were to be scheduled in the second half of the last month of each quarter to coincide with direct tax inflows. These restrictions have now been removed.

Financial Advisers will review and finalize the timing for the receipt of dividends and other non-tax income for their respective ministries and departments. Dividend payments and buyback considerations will be targeted for the first half of the financial year.