The UPA Government announced a seven-point austerity drive that bans creating new jobs, new vehicles purchase as part of the 10 per cent cut in Rs 11.1 lakh crore non plan expenditure this financial year to rein-in fiscal deficit.
A financial ministry office memorandum issued Wednesday following a meeting finance minister P Chidambaram had with financial advisors on Tuesday said there would ban on holding meetings and conferences in five star hotels.
Domestic air travel by bureaucrats will be in economy class and foreign travel will be restricted, the memorandum said adding the 10 per cent cut in non-plan expenditure will exclude spending on interest payments, repayment of debt, defence capital, salaries, pension and finance commission grants to states.
Interestingly enough, the memorandum was silent on subsidy payments.
This confirms the move to defer food, fertilisers and oil subsidy payments to next financial year.
The circular said holding exhibitions; seminars and conferences abroad would be discouraged except for trade promotions Finance ministry directive makes it clear that not more than one-third of the budget estimates will be allowed to be spent in last quarter of the this financial year to ensure that there is no bunching of expenditure. It is also stipulated that the total expenditure in March 2014 will not be more than 15 per cent of the budget estimate.
Rush of expenditure on procurement should be avoided during the last quarter of this financial year and no financial commitment should be made on items that were not provided for in the budget.
Government had imposed similar austerity last financial year as well to rein-in fiscal deficit at 4.9 per cent of GDP . Last year the plan expenditure was pruned by Rs.93,000 crore but this year the instruction is to spend the entire Rs.5.5 lakh crore to kick-start sagging economic growth. As it is, the increase in plan expenditure this year is a modest five per cent.
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