The finance ministry has reduced spending limits over Rs 500 crore in order to speed up capex (capital expenditure), which is expected to reach Rs 11.11 trillion in the current fiscal year. This will boost government spending, which had slowed for a few months owing to general elections. Finance Minister Nirmala Sitharaman recommended in the Budget to increase capital expenditure by 11.1% to Rs 11.11 trillion in 2024-25.

To offer the necessary operational flexibility in the execution of the Budget, it has been agreed to loosen criteria for significant releases of more than Rs 500 crore for all categories of expenditure in the current fiscal year, according to an office memorandum dated September 2, 2024.  All ministries and departments must strictly adhere to the permissible relaxation, according to the statement.

All expenditures must adhere to the rules of the Single Nodal Agency (SNA)/Central Nodal Agency (CNA), as well as the Monthly Expenditure Plan (MEP) and Quarterly Expenditure Plan (QEP) ceilings issued by ministries for both scheme and non-scheme expenditures, according to the statement.

Previously, a May 2022 memorandum required the distribution of funds ranging from Rs 500 crore to Rs 2,000 crore in order to track expenditure and cash flow. To take advantage of GST inflows, the release dates may be fixed between the 21st and 25th of each month.

Similarly, bulk expenditure items worth more than Rs 2,000 crore were to be scheduled during the second fortnight of the final month of the quarter to take advantage of direct tax receipts inflow. These circumstances will no longer exist.

Financial Advisors would assess and freeze the timing of dividends and other non-tax income for their respective ministries and departments, it added. Dividend payments and buyback considerations will be targeted for the first half of the fiscal year, it said.