Economists may not be too pleased with the austerity measures the Finance Ministry is expected to announce any time from now through a circular. A rough estimate shows that the Government may not be able to save more than Rs 5,000-8,000 crore through these measures.

‘Symbolic' steps

A highly placed Government source told Business Line , “One should not expect any significant new measure this time. It will be more a kind of symbolic one.” After the global crisis, the Finance Ministry announced austerity measures on June 5, 2008, and then in September 2009.

The Finance Minister, Mr Pranab Mukherjee, while replying on the Finance Bill in Rajya Sabha on May 16, said, “I am going to take a little bit of unpopular steps. I am going to issue some austerity measures….” However, the source pointed out that this will not be easy. Most of the non-Plan expenditure, such as towards interest payment, debt servicing, subsidy, Defence services, salary and pensions, grants to States, and so on, cannot be touched. “In fact, we may expect additional payout on account of subsidy for petroleum and fertiliser,” he added.

So, like previous years, the Finance Ministry is likely to talk about cutting expenditure on domestic and foreign travel expenses.

The obvious item would be cutting expenditure on seminars, workshops and conferences. The Ministry may prescribe holding these events only if ‘absolutely necessary', and not in five star hotels. The Finance Ministry is also expected to suggest creation of an asset management agency which will take care of new vehicles, computers and other office items.

Last-minute expenditure

Another measure could be restrictions on last-minute expenditure. Though there is an expenditure limit of 33 per cent for the last quarter of the financial year, Ministries rush to spend more, citing one reason or other. The new circular may issue strict guidelines in this regards.

>Shishir.s@thehindu.co.in

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