20% cap on spending of Plan funds
T'puram: Amid tight liquidity conditions, the state govt has imposed a 20% ceiling on departmental spending of Plan funds for the first quarter of 2025-26. It has directed departments with critical social sector commitments to urgently assess and report their fund requirements to ensure timely disbursal of payments like scholarships and welfare fees.The revelation was made at a high-level review meeting chaired by the chief secretary last month, where the finance (resources) department flagged the potential impact of the spending cap on essential govt functions.
According to the minutes of the meeting (accessed by TOI), departments handling time-bound or welfare-linked payments were specifically asked to examine fund flow requirements and notify the finance department without delay.The review also focused on
centrally sponsored schemes
(CSS), which form a major part of
state development funding
. The central share for CSS in 2025-26 is projected at Rs 9,153.71 crore — an increase from Rs 8,259.19 crore in 2022-23. However, several departments have yet to receive full allocations for ongoing schemes, prompting the govt to order a department-wise review of CSS fund receipts for both the current and previous financial years.At the meeting, the departments were instructed to identify delays, determine the reasons for non-receipt and take up the matter with Centre if required.
The finance department is also monitoring utilisation patterns to ensure funds already sanctioned do not lapse due to procedural delays.The meeting underscored the operational challenges posed by the single nodal agency (SNA) Sparsh system, which requires state's share to be deposited in designated accounts before central share can be released. To avoid delays, departments have been asked to inform the finance department of fund needs in advance to facilitate smooth fund flow.While finance department maintained that the 20% cap is a temporary fiscal control to manage early-year cash flow, experts cautioned against a one-size-fits-all approach to spending restrictions."A trend seen earlier was to make a large chunk of the expenditure of the Plan funds in the last quarter or even last month of the financial year, which is an unhealthy practice and indicates that no proper implementation of the schemes or projects is happening. Though it is not the case now, the ideal scenario is to spend funds uniformly. Keeping fixed caps for spending for schemes or projects is not logical as you never know what is the status of the schemes or projects. Such a cap may affect those schemes or projects," said economist and State Public Expenditure Review Committee former head D Narayana.All additional chief secretaries, principal secretaries, secretaries and special secretaries have been directed to ensure strict adherence to these instructions and coordinate with the finance department to avoid service disruptions. The govt is also exploring temporary reallocation models to prioritise committed expenditures without breaching fiscal discipline.As CSS commitments grow and the state's fiscal space remains constrained, the coming quarter will test the state's ability to balance prudent financial management with uninterrupted public service delivery.
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