Government to cut its expenditure, launch austerity drive
Facing a slow-down in the economy, the government has launched an austerity drive to reduce expenditure, banned new posts and meetings in five-star hotels besides restricting foreign travel.
The finance ministry, which issued the office memorandum on "Expenditure Management - Economy Measures and Rationalisation of Expenditure" Thursday also asked all ministries to reduce non-Plan expenditure by 10 percent in 2012-13.
"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 the order.
Official sources said curbing foreign travel and banning meetings in five-star hotels may help control expenditure, but the government should focus on reducing various subsidies, including on fertilisers, oil and food, if it wanted to curb the fiscal deficit.
The government is targeting to bring down fiscal deficit from 5.7 percent of the GDP in 2011-12 to 5.1 percent in the 2012-13 fiscal.
Not much reduction in the non-plan expenditure can be effected as around 70 percent of it goes in to paying staff salaries, said sources.
According to the finance ministry order, the size of the delegation and the duration of the visit should be kept to "absolute minimum" in case of foreign travel.
Further, the memorandum "strongly discouraged" holding of exhibitions, seminars and conferences abroad.
Finance Minister Pranab Mukherjee had earlier told parliament that he would come out with austerity measures to check fiscal deficit.
"There is an urgent need for rationalisation of expenditure and optimisation of available resources with a view to improve the macro-economic environment," the order said.
Secretaries of the ministries would be responsible to ensure compliance of the austerity measures, it said.