Bihar government has issued a circular to the treasuries of the state and directed them to put a ceiling of 75% on the release of funds against budget outlay under state schemes for the last quarter.
The notification was issued on Wednesday by the state finance ministry in a bid to spend funds judiciously and check the parking of funds ahead of the closure of the books of accounts in March of this fiscal year 2022-23.
“The treasuries should clear bills of expenses made under committed expenditure (salaries, pension, interest payment, grants to universities, maintenance, DA, increment, etc) up to 35% for the last quarter ie 100% for this fiscal year whereas, for state schemes, it should be capped at 75%,” the circular issued on November 30 states.
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However, sources in the state department said the decision to put a cap on the release of funds for state schemes in the last quarter when infra projects and earthworks gain momentum is indicative of the state facing a shortfall in resources.
“It is apparent, there is a shortfall of revenue to meet full budget outlay against state schemes. The remaining tranche of budget outlay from treasuries would be allowed in coming months depending on the revenue flow,” said a financial official, seeking anonymity.
The last quarter should have permitted expenditure and release of funds up to 35% as against the budget outlay of various departments as per financial norms, said an official.
According to the officials, in simple terms, the government has only allowed 10% of expenses against budget outlay in the last quarter in addition to 65% of expenses and clearance of bills permitted against budget outlay in the last two quarters. The remaining 25% of expenses of the budget outlay for the last quarter by departments have been withheld and could be permitted depending on fund flow.
Officials said the government has been facing the pressure of a shortfall of resources in this fiscal commensurate to the budget outlay of ₹2.49 lakh crore (revised estimate). One factor, officials said, is a rise in committed expenditure in the last few years while secondly, the state government this year is facing the pinch of discontinuation of the goods and services tax (GST) compensation to states.
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The committed expenditure of the Bihar government in this fiscal year is above ₹1.50 lakh crore and expected to rise more in view of the increase in salary bills due to fresh appointments, officials said. “The committed expenditure has risen by 10-12% in the last few years. However, once the number of appointments goes up, it is going to increase more,” said another official in the finance department on the condition of anonymity.
Besides, the state’s own revenue is limited and the government heavily depends on central devolutions even as the state also has the pressure of keeping fiscal deficit within limits of 3.5% of the GSDP (gross state domestic product) as fixed by the union government under FRBM (fiscal responsibility budget management) act.
According to data, the state government by end of November has received ₹55,000 crore as against an estimated ₹91,000 crore so far whereas the state’s own tax revenue (registration, transport, commercial taxes) is said to be over ₹25,000 crore so far as against the target of ₹41,000 crore for the current fiscal year. The state non-tax revenue (mining, royalty, sand) is targeted at ₹6,100 crore for this fiscal year.
Meanwhile, S Siddharth, additional chief secretary, finance, said there was no shortfall of funds as such and the remaining tranche for expenses and release of funds would be allowed from 1 February 2023.
“We will give it from February 1st,” he said. He also said parking of funds is not allowed and the government keeps a close eye on all financial dealings.