The Finance Ministry has relaxed the expenditure caps for a number of ministries and departments, a move which should add power to the economy’s wheels by way of extra government spending.

The so-called ‘expenditure management guidelines‘ had restricted the budget spend for these ministries and departments to 15 percent, for the first 3 quarters till end of December.

A 22 percent year-on-year drop in government expenditure has added to the woes of the economy, which has now shrunk for two consecutive quarters.

“The cash management guidelines have been relaxed in general for most ministries, although there is considerable easing for Development, Infra, and welfare related ministries. Ministries can now spend 25 percent of the revised estimates every quarter without the Finance Ministry’s approval, “ a government official told CNBC-TV18.

As indicated by officials , finance ministry has relaxed the spend ceilings after the pre-budget meetings for revised estimates FY21, which saw a reworking of the spend allocations for the rest of the financial year.

Given the fact that the expenditure restrictions were in place until October end, the possibility of the revised estimates for ministries being lower than the original budget allocation is not ruled out. Hence, the restoration of the quarterly spending limits could still see a shrinking of government expenditure than what was originally planned before COVID, at least for some ministries.

Officials say one has to wait for the Budget to know the revised estimates of government expenditure for the current fiscal.