Spending on only PM Garib Kalyan and Atmanirbhar Bharat allowed 

Resource-starved as it is, the Government will not start any new schemes for a year, the Finance Ministry said on Friday making it clear that any spending will only be allowed in the Prime Minister’s “Garib Kalyan Package” and the recent announcements made under “the Atmanirbhar Bharat package”. No other scheme would be approved.

Schemes already approved under the Budget will also stay suspended till March 31, 2021.

The drastic move is to tighten spending amid rising coronavirus cases with no clarity on when the pandemic will peak in the country.

“It may be appreciated that in the wake of the Covid-19 pandemic, there is an unprecedented demand on public financial resources and a need to use resources prudently in accordance with emerging and changing priorities,” the expenditure department, under the Finance Ministry, said adding that it has been receiving many new proposals for in-principle approval from various Ministries or departments.

All Ministries have been told to stop sending requests for new schemes to the Finance Ministry. Spending will only be allowed in the Prime Minister’s Garib Kalyan Package and the announcements made under the Atmanirbhar Bharat package, it said.

“No new proposals for a scheme/sub-scheme should be initiated this year (2020-21) except the proposals announced under the Pradhan Mantri Garib Kalyan Package, the Aatmanirbhar Bharat Abhiyan package and any other special package/announcement,” a Ministery note said.

Union Finance Minister Nirmala Sitaraman had announced Rs 1.70 lakh crore PM Garib Kalyan package on May 6 and 20 lakh crore Aatmanirbhar Bharat Abhiyan package on May 16 with emphasis on giving quick relief to poor and small scale industries and reviving economy with a new mantra of ‘swadeshi’ and self-reliance.

The latest step has been taken in view of rapid slowdown in the economy, including the slowest GDP growth in 11 years and predictions of an economic squeeze in more than four decades. India’s credit rating also moved one step closer to junk after Moody’s Investors Service downgraded the nation to the lowest investment grade level.

Last month, the Finance Minister said future fiscal policy actions to stimulate the economy would depend on how COVID-19 pandemic pans out.

With regard to the existing ongoing schemes, the department said it has already given an interim extension till March 31, 2021, or till the date the recommendations of the 15th Finance Commission come into effect, whichever is earlier.

“No funds may be released for schemes that are not in strict conformity to the instructions...nor should budgetary provisions be made available by re-appropriation to such schemes,” the ministry’s note said adding any exceptions to these guidelines would require approval of the expenditure department.