Cash Management and Exchequer Control


Exchequer Control Based Expenditure Management was initially introduced from 1st April, 2006. Based on the working of the scheme, it was decided to expand and modify the scheme as
detailed below. The Modified Cash Management System seeks to achieve, interalia, the following objectives-
(i) Obtain greater evenness in the budgeted expenditure within the financial year, especially in respect of items entailing large sums of advance releases and transfers to corpus funds;
(ii) Reduce rush of expenditure during the last quarter, especially the last month of the
financial year;
(iii) Reduce tendency of parking of funds;
(iv) Effectively monitor the expenditure pattern; and
(v) Better planning of Indicative Market Borrowing Calendar of the Central
The scheme has been made applicable on 23 Demands for Grants for the time being (with effect
from 2007-08), and the Financial Advisers have been made responsible for the implementation of the modified expenditure management system. The scheme provides that in respect of each Demand for Grant, a Monthly Expenditure Plan (MEP), separately for Plan and Non Plan expenditure would be worked out and included in the suggested format, as an annexure to the said Detailed Demand for Grant. MEP would also form the basis of Quarterly Expenditure Allocations (QEA), implying, the Department/Ministries concerned may not issue cheques beyond the QEA (which would be equivalent to the sum of provisions under MEP), without the
prior consent of Ministry of Finance, Cash Management Cell (Budget Division). MEP and the
QEA may be made in gross terms.
The Monthly Expenditure Plan may be finalized taking into account that (a) MEP for the month of March may not exceed 15 percent of the budgeted provision (Budget Estimate); (b) MEP for the months of January-March may be so fixed that the QEA for the last quarter may not exceed 33 percent of the budgeted provision; and (c) keeping in view the extant guidelines of Ministry of Finance, Department of Expenditure.
The expenditure control would apply cumulatively at the Demand for Grants level only, i.e. inter se variations between months within a quarter, between Plan and Non Plan and between schemes would be permissible, subject to statutory restrictions and extant guidelines. Savings under the QEA would not be available for automatic carry forward to the next quarter and the Department/Ministry would require to approach Ministry of Finance for revalidation of such
savings through modification in the MEP and thereby QEA. Spill over in respect of MEP, not inconsistent with QEA would not require prior revalidation from Ministry of Finance, but may be included in the quarterly modification. The scheme provides that the Ministry of Finance is to consider such requests for revalidation within a period of 15 days of receipt of such request, failing which the request for revalidation would be deemed to have been granted.
The scheme further provides that the MEP and QEA pertaining to the 4th quarter of the financial year would be subsumed in the finalization of the Revised Estimates for the financial year.
In respect of Demands for Grants not covered by the Modified Exchequer Management System, it has  been advised that the expenditure in the last quarter of the financial year may not exceed 33 percent of the budget allocation for those Demands for Grants. However, in the event of Revised Estimate being fixed lower than the Budget Estimate, actual expenditure may be kept within the Revised Estimate.

Monday, 15th Feb 2016, 11:30:50 AM

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