FinMin bans purchase of vehicles,appointments in new austerity drive

Amidst concerns over its rising fiscal deficit,the finance ministry has clamped down on spending by government ministries

Written by ENS Economic Bureau | New Delhi | Published:September 19, 2013 3:14 am

Amidst concerns over its rising fiscal deficit,the finance ministry has clamped down on spending by government ministries and issued fresh austerity measures that include a 10 per cent cut in non-plan expenditure as well as a complete ban on purchase of new vehicles and creation of posts.

“In the context of the current fiscal situation,there is a need to continue to rationalise expenditure and optimise available resources,” expenditure secretary RS Gujral said in a missive to all nodal ministries while noting that the measures are meant at promoting fiscal discipline without restricting operation efficiency. The guidelines come less than a year after the last set of austerity measures were issued in November 2012 and are largely similar in content. “Ministries were already following the last set of austerity measures. Typically,these lead to nominal savings but send across the message that wasteful expenditure is not acceptable,” said an official.

The government’s total non-plan expenditure on revenue account (excluding interest payments) is estimated at Rs 6.22 lakh crore in Budget 2013-14. Officers have been directed to travel only by economy class in domestic tours though they can fly by their entitled class in international trips. No companion or free tickets will be allowed. Further,secretaries of each department have been mandated to ensure that foreign travel is restricted for only the most necessary purposes. The finance ministry has also banned orgnanising meetings and conferences in five star hotels and has called for “utmost economy” in holding all such events.

The measures come just a day after finance minister P Chidambaram met financial advisers of all nodal ministries to review expenditure and stressed that the fiscal deficit target of 4.8 per cent must not be breached. But a higher oil subsidy bill as well as the implementation of the food security programme pose key challenges to this target. Data on direct tax receipts also points to muted collections with a 12.5 per cent growth. Net direct tax collections till September 17 stood at Rs 2,38,325 crore with advance tax collections for the September quarter rising by just 9.14 per cent.

Fiscal Discipline

*Government to cut non-plan expenditure by 10 per cent

*Officers have been directed to travel only by economy class during domestic tours

*Finance ministry has also banned meetings and conferences in five star hotels

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