A directive from the Ministry of Finance has barred all ministries and departments from announcing any new schemes for the current fiscal year in order to deal with the strain put on the economy due to the corona pandemic. All the schemes approved for the current year have been put on hold until the end of March 2021.
In another expenditure check under the garb of lockdown impact, Modi govt freezes new projects for a year. No funds to be released for schemes announced in 2020-21. pic.twitter.com/gxK7JjZu1l— Aakriti Sharma (@_aakritisharma) June 5, 2020
The government will only be accepting proposals under the Pradhan Mantri Garib Kalyan Yojana and the Atmanirbhar Bharat Abhiyan. “In the wake of the COVID-19 pandemic, there is an unprecedented demand on public financial resources and a need to use resources prudently in accordance with emerging and changing priorities", reads a directive.
After freezing Dearness Allowances (DA) of government employees and saving an estimated $5 billion, this is the second expenditure check in line with the Modi government's effort to mobilise resources to battle the coronavirus pandemic and its fallout.
The ministry has also made it clear that the “continuation of all schemes would be based on an outcome review based on evaluation".
The repercussions of a complete halt on economic activities for two months can now be seen in the fall of tax revenues of both the federal and state governments. It has been reported that the country’s indirect tax (GST) collections for April were $5.6 billion, which is much less than the April 2019 collection of $13.3 billion.
In May of this year, Indian Prime Minister Narendra Modi announced a $266 billion financial aid package or 10 percent of the country’s gross domestic product to give an impetus to the slowing economy. The latter recorded a decade-low of 3.1 percent in the January-March quarter of this year.
On 22 May, the governor of India’s Central Bank, the Reserve Bank of India (RBI), Shaktikanta Das said the COVID-19 pandemic will likely lead to negative growth in the fiscal year ending in March 2021.