Govt launches austerity drive, bans meetings in 5-star hotels


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PTI

New Delhi, 31 May 2012: Launching an austerity drive to contain expenditure, the government today banned creation of new posts in its departments and holding their meetings in five-star hotels besides imposing curbs on foreign travel.

 

The Finance Ministry has also asked all ministries and departments to reduce non-Plan expenditure by 10 per cent in the current financial year.

 

"There will be a total ban on holding of meetings and conferences in five-star hotels...purchase of vehicles is banned until further orders," said an office memorandum issued by the Ministry.

 

On foreign travel, it said, the size of the delegation and the duration of the visit be kept to "absolute minimum".

 

Finance Minister Pranab Mukherjee had earlier said in the Rajya Sabha that his Ministry would come out with austerity measures to check fiscal deficit.

 

The office memorandum on ’Expenditure Management - Economy Measures and Rationalisation of Expenditure’ also said that holding of exhibitions, seminars and conferences abroad is "strongly discouraged".

 

It said "foreign visits should be so regulated as to ensure that each ministry remains within the allocated budget (after 10 per cent cut) for the same. Re-appropriation proposals on this would not be approved"

 

The Ministry further said no amount should be released to any entity, including state governments, which has defaulted in furnishing utilisation certificates for grants-in-aid released by the central government without prior approval of the Finance Ministry.

 

The austerity measures have been announced in the context of current fiscal situation where there is a "tremendous pressure" on government’s resources.

 

"...there is an urgent need for rationalisation of expenditure and optimisation of available resources with a view to improve the macroeconomic environment," the order said.

 

The government’s fiscal deficit during 2011-12 was 5.7 per cent of the GDP. The Centre is aiming to bring it down to 5.1 per cent in the current fiscal. It is targeting to cut the subsidy bill to below 2 per cent of GDP this fiscal and 1.75 per cent in the subsequent years.

 

The Finance Ministry’s further said that rush of expenditure on procurement should be avoided during the last quarter of the fiscal and, in particular, the last month of the year "so as to ensure that all procedures are complied with and there is no infructuous or wasteful expenditure".

 

Secretaries of the ministries and departments would be "fully charged" with the responsibility of ensuring compliance of the measures, the memorandum said.

 

 

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Comments on this Article
Philip Mudartha, Qatar Fri, June-1-2012, 4:18
The blame rests squarely with Pranab-da, the much admired wizard, the trouble-shooter par excellence and sulking babu from bhadralok. The confused man told us our economy is resilient, decoupled, domestic consumption driven, well regulated, growing in a global recessionary environment, and patted his own back. The signs were there for anyone who can see for nearly two years. Our own industrialists and businessmen finding foreign lands attractive to acquire businesses, domestic Indian investors finding Gold as the most attractive investment, this man behaved as if of foreigners are just waiting to bring their money and set up businesses in India and give our people jobs. Nothing of that happens, because no one in in blind love with us, because we Indians think we deserve love. No one deserves anything, we should earn everything. Pranab-da failed to steer economy, his main business as finance minister, by removing bureaucratic strangleholds on investing. Investment did not happen though money was there. This did not happen because he gave too much money to expand government, and in other words, for too much government. Now, let it rest for a while, sulk, work less, and pray
Benedict Noronha, Udupi Thu, May-31-2012, 10:36
Very good move Dr Singh.our beloved P.M. Can you roll back the raise in the allowances raised to M.P.s last year or suspend for one year? Then lots of Administrative expenses could be reduced. All other steps you have suggested. Let the beginning be from your Top leaders so that the poor will find some relief in ccheck in inflation. Please lead by Example for the good of this Country Called BHARATH.
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