‘Don’t expend more than 50% of budget allocation’

State govt. fiat to departments comes after finances take a beating

Published - June 06, 2020 01:19 am IST - Bengaluru

With finances taking a severe beating over the last two months owing to the lockdown, the State government has made a downward revision of budget allocation to department plans and is tightening its belt by asking departments not to exceed 50% of the budget allocation in their expenditure till tax collections improve.

The directions that will remain in place for a period of six months - between June and November - will be reviewed by the year end and depend on the buoyancy in tax collections. While the government has told the departments to compulsorily seek the Finance Department’s concurrence to any project that is more than ₹10 crore, departments also cannot start any new project without FD approval.

Financial prudence

Departments, in detailed guidelines issued, have been asked to maintain financial prudence in their expenditure, and they been asked not to spend money on purchase of vehicles, furniture, or spend on repair or construction of buildings. No new projects will be taken up without FD approval even as the departments have been asked to prepare a new action plan to move forward in the midst of the pandemic. “For social security pensions, food security (Anna Bhagya), salary and pension and expenditure on basic infrastructure have been exempted from the stringent guidelines,” government sources said.

A head of the department said, “We have been asked to prioritise ongoing work and no new projects will be taken up this year. Some ongoing projects may not receive enough money. Even if our action plan exceeds 50%, we will have to seek Finance Department concurrence again.” It is mostly Centrally funded projects that will be going on. These are also expected to see a cut in allocation. State-funded projects could take the beating.

Revenue collections

Revenue to the government has been severely hit. Excise duty collected in May - after the sale of liquor was allowed after over a month - has been ₹1,387 crore, far less than the anticipated collection.

While the State gets about ₹3,200 crore a month as its share in GST collection, it collected about 20% of it in April, and received about 60% in May, which is mostly deferred payments as time has been extended for filing returns. The GST collection in May, including SGST and IGST settlement was about ₹1,987 crore as against ₹3,142 crore in the corresponding period last year. Karnataka Sale Tax collection in May was ₹536 crore, less than half of the normal monthly collection.

The collections from the registration fee and stamp duty have also not reached normal yet. On an average, monthly collection in the Stamps and Registration Department would be about ₹1,000 crore. The collection since April has just been ₹420 crore, sources said. Another source said that as against the average collection of about ₹50 crore a day, the current average collection is about ₹15 crore.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.