The Centre on Friday said it will not float any new public-funded scheme for the next one year and suspend all new schemes costing up to Rs 500 crore till March 2021, seeking to channel more financial resources to fight the Covid-19 pandemic which has cast a shadow over the economy.
The central ministries have been asked to send a list of schemes costing up to Rs 500 crore to the department of expenditure falling under the Ministry of Finance.
The Union government’s decision will not affect Prime Minister’s Garib Kalyan package and the announcements made under the Atmanirbhar Bharat policy, which was announced recently to fight the coronavirus outbreak.
“There is an unprecedented demand on public financial resources, and a need to use resources prudently in accordance with emerging and changing priorities,” a government order said.
The focus, the order said, should be on the schemes announced as part of the Pradhan Mantri Garib Kalyan Yojana or Atmanirbhar Bharat campaign.
The order also said that any exception to these new rules would need to be approved by the Department of Expenditure. It is not yet clear which schemes would be suspended, but a close look at the Union Budget papers suggest that most of the expenditure under the central sector schemes are too small.
There are 235 line items in the central sector schemes where allocation is less than Rs 50 crore. An impact analysis done by former economic affairs secretary Subhash Chandra Garg suggests the government can do away with quite a few of them.
For example, the department of agriculture’s budget has as many as 18 central sector schemes, with budgets of some of the schemes as low as Rs 50 crore.
These include: the National Project on Agro-Forestry (Rs.50 crore), Sub-Mission on Plant Protection and Plant Quarantine (Rs 50 crore), Integrated Scheme of Agriculture Cooperation (Rs 85 crore) and Scheme of Information Technology in Agriculture (Rs 40 crore).
According to Garg, it would make no difference even if these schemes were clubbed.
Similarly, the Department of Animal Husbandry and Dairying implements an umbrella scheme called ‘White Revolution’, whose total allocation is small (over Rs 2,240 crore) but still has 9 schemes under this umbrella.
The move comes after the government announced spending curbs of up to 20% by most ministries and departments in the April-June quarter. Subsequently, the Centre also announced a freeze on dearness allowance hike for its employees.