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

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...

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.