Amid Raging Second Wave of Covid-19, Govt Cut Down Expenditure in April 2021

Instead of announcing a fiscal stimulus to protect a tanking economy and increasing spending on relief measures, the government has been tardy in spending from its budgeted estimates (BE) for 2021-22. Data from the Controller General of Accounts shows that the government cut down on its expenditure in April 2021. This has been the case despite robust tax collections made by the government in April 2021. 

The total expenditure made by the government in the month of April is Rs 2,26,690 crore, which is just 7% of the annual BE for FY2021-22. In contrast, in April 2020, the government had spent 10% of the annual BE for FY2020-21. Despite a year of a jarring crisis and a severe second wave of Covid-19 unfolding at the time, the government spent less than it did in the previous year in April. Less expenditure means that finances for crucial welfare schemes have been squeezed out adding further to the people’s distress.  

In April 2020, the government spent Rs 3,07,060 crore. In April 2021, its spending is 26.2% lower than that in April 2020. Spending in April 2021 is, in fact, even lower than the average expenditure of Rs 240,000 crore incurred in April 2017, 2018 and 2019. 

The following table shows the percentage of actual expenditure of the government in the months of April 2020 and April 2021 to the annual BE for FY 2020-21 and FY 2021-22 respectively.

There has been a shocking fall in the government spending on the Ministry of Agriculture and Farmers’ Welfare from 18% of BE in FY 2020-21 to a meagre 4% of BE in FY 2021-22. This comes down to a spending of Rs 5,175 crore in April 2021, which is a slump of 79.9% from the spending last year. Some of the most critical schemes under the Ministry of Agriculture and Farmers’ Welfare include PM Kisan Samman Nidhi Yojana, Pradhan Mantri Fasal Bima Yojana (PMFBY), Pradhan Mantri Krishi Sinchai Yojana and Kisan Credit Card. Last year, a total of Rs 17.79 crore was transferred by the government to farmers under PM-KISAN till April 2020. This year, even those funds were released later in May. 

The spending under the Ministry of Rural Development also fell drastically from 31% of the BE in FY2020-21 to a minuscule 3% of the BE in FY2021-22. While in April 2020, the government spent Rs 38,059 crore on this Ministry, the expenditure this year has come down to Rs. 4,363 crore. This was a decline of 88.5%. Among the most prominent schemes under the Ministry are Mahatma Gandhi National Rural Employment Scheme (MGNREGS), Pradhan Mantri Awaas Yojana - Gramin (PMAY-G), Deen Dayal Antyodaya Yojana – National Rural Livelihood Mission (DAY-NRLM). A report by the CMIE highlights that only Rs 3.4 crore has been made available to the MGNREGS in April 2021 as against a requirement of Rs 8.15 crore. This deficit would have translated into a delay in payments to labour and raw material. 

However, the expenditure of the government on the Ministry of Consumer Affairs, Food and Public Distribution increased significantly from Rs 19,688 crore in April 2020 to Rs 39,407 crore in April 2021. This Ministry runs significant schemes like the Public Distribution System and Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY). 

Surprisingly, the government has spent nothing on the Ministry of Minority Affairs, the Ministry of Social Justice and Empowerment and the Ministry of Women and Child Development in April 2021. These Ministries run several important welfare and scholarship schemes. Last year, the government had spent Rs 225.77 crore, Rs. 352 crore and Rs. 1635 crore on the Ministries of Social Justice and Empowerment, Tribal Affairs and Women and Child Development respectively. The expenditure on the Ministry of Education in April 2021 was Rs 2,416 crore. The spending came down to 3% of BE in FY 2021-22 from 5% of BE in FY 2020-21. 

The tax collections made by the government in April stood at Rs 170 crore, which is the highest that it has ever made in the month of April. The gross tax collections in April 2021 were, in fact, two and a half times the collections made in April 2020. It was 66.8% higher than the average tax collections made in April 2017, 2018 and 2019. Despite record tax collections and a country reeling under Covid-19, the government spent even lesser than it did in the same month last year. The CMIE report notes that rather than spending on relief measures or economic stimulus, higher revenue has been utilised by the government to reduce its fiscal deficit which stands at Rs 78.7 crore, which is the lowest deficit reported in the month of April since 2012-13. 

The writer is an author and a Research Associate with Newsclick. The views expressed are personal. She can be reached on Twitter @ShinzaniJain.