Modified cash management system to cover 23 central govt departments

The finance ministry has expanded the scope of Modified Cash Management System (MCMS), introduced earlier this fiscal, to cover nine more central government departments and ministries, taking the total number to 23. The changes will come into effect from April 1, 2007.

From now on, all quarterly demands for grants will have to remain within the budget allocation and any savings incurred within a quarter would be subject to finance ministry approval to carry them forward to the next quarter.

The MCMS was put in place on April 1, 2006 in order to reduce the rush of expenditure towards the end of the financial year and achieve greater evenness in budgeted expenditure.

According to a finance ministry office memorandum, in respect of each demand for grants, monthly expenditure plan has to be worked out, which would form the basis of quarterly expenditure allocations. The ministries and departments concerned have been asked not to issue cheques beyond the quarterly allocation.

For helping departments and ministries finalise their monthly expenditure, the finance ministry has laid down certain guidelines. These include that the monthly expenditure for March should not exceed 15 per cent of the budget allocation. For the last quarter of a financial year, the monthly expenditure cannot exceed 33 per cent of the budgeted provision.

The concerned department or ministry has to approach the finance ministry for revalidation of any quarterly savings. However, they do not require prior revalidation from the finance ministry for the spillover of monthly expenditures.