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The Finance Ministry on Thursday announced austerity measures but without any big-bang cuts. As expected, Government conferences in five-star hotels, purchase of vehicles and creation of posts have been banned. Interestingly, the circular has left out directions for travel in economy class.
The measures for fiscal prudence and economy will come into effect immediately, says a new circular issued on Thursday. According to the circular, “For the year 2012-13, every Ministry/Department shall effect a mandatory 10 per cent cut in non-Plan expenditure, excluding interest payment, repayment of debt, Defence capital, salaries, pension and Finance Commission grants to the States.” The total non-Plan expenditure for the current fiscal is proposed is Rs 9.69 lakh crore. This circular follows the Finance Minister, Mr Pranab Mukherjee's, announcement in this regard on May 16, when he said: “I am going to take a little bit of unpopular steps. I am going to issue some austerity measures.”
The circular said there was urgent need for rationalisation of expenditure and optimisation of available resources as there was tremendous pressure on Government's resources in the current fiscal situation.
Usual measures
There will be total ban on creation of Plan and non-Plan posts. The Government has also banned holding of meetings and conferences in five-star hotels.
It has also been said that there will be 10 per cent cut on the Budgetary allocation for seminars and conferences.
Purchase of vehicles will not be allowed until further orders. Also, there will be no purchase against condemned vehicles.
The circular also mentions that proposals for participation in study tours, workshops, conference, seminars and presentation of papers abroad at Government cost will not be entertained. However, fully-sponsored trips will be exempted.
Pace of Expenditure
The Ministry said that the rush of expenditure towards the end of the financial year continued to be an area of concern. As per extant instructions, not more than 33 per cent of the Budget Estimates may be spent in the last quarter of the financial year. It also reiterated the stipulation that during March, the expenditure should be limited to 15 per cent of the Budget estimate.
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