Finance Department cites operational difficulties faced by departments; electricity subsidy exempt from change
Shimla: The Himachal Pradesh government has reversed its earlier decision mandating monthly release of grants-in-aid and subsidies under state-funded schemes. The Finance Department, through a fresh directive issued on Friday, has restored the previous system of disbursing funds on a quarterly or annual basis.
Principal Secretary (Finance) Devesh Kumar, in a letter addressed to all Administrative Secretaries and Heads of Departments, announced the withdrawal of the August 8, 2023 instructions that had enforced monthly financial releases. The decision comes in response to persistent requests from various departments that had flagged administrative difficulties in executing schemes under the monthly model.
Departments were particularly constrained by restrictions on withdrawing advance funds and depositing them into departmental bank accounts. They also required prior approval from the Finance Department for holding funds in such accounts and were obligated to return interest earned to the state treasury. These limitations hampered the smooth execution of several developmental and welfare schemes, especially in agriculture and horticulture, where seasonal or lump-sum disbursement is often necessary.
The new directive, effective immediately, reinstates the more flexible funding mechanism that was in place before the August 2023 guidelines. Officials say this move will restore efficiency and autonomy in managing state schemes.
However, the electricity subsidy, which directly benefits a large section of the population, will remain unaffected. As clarified in the official communication, it will continue to be disbursed monthly.
The August 2023 order had originally been implemented to enforce stricter financial discipline and staggered expenditure. But the practical challenges faced by departments led to widespread demand for a rollback.
Officials from departments involved in development schemes welcomed the decision, calling it timely and pragmatic. “The earlier rules made it difficult to plan and execute projects that require upfront investments or follow seasonal timelines. This change will definitely improve scheme implementation,” said a senior official from the Horticulture Department.
