New Delhi, Oct 23 (IANS): The Finance Ministry has asked all departments/ministries to limit their demand for the next two fiscal years (FY 2020-21 and 2021-22) to a 5-7% growth of the previous year's allocation and provisional actuals for the preceding fiscal (2018-19) under the Medium Term Expenditure Project.

"While making expenditure projections, the ministries/departments may restrict themselves to a normative expenditure growth of 5-7% over the previous years' allocations or projections subject to their actual requirements", said Medium Term Expenditure circular.

It said while preparing the estimates, care must be taken to first budget for all committed and continuing expenditure.

The ministries will give justification for any increase sought in the Budget for any of its schemes of new expenditure. In case where extra normal increase of over 7% is sought in funds, the departments have to indicate extra revenue generation or matching savings to meet additionality sought along with reasons, the circular said.

The Budget division then works out the expenditure of demands and selected schemes which will be co-integrated with MTEF for the whole economy and that of the particular department or ministry which was presented along with the 2019-20 Budget.

For MTEF , Ministries/departments assess and review their requirements over the medium term (next two financial years) about expenditure commitments on major policy changes, new schemes/programmes, salaries , pensions, interest payments, defence expenditures, major subsidiesand other commitments, said the circular.