Austerity measures unveiled

Austerity measures unveiled

The Centre on Wednesday announced 10 per cent reduction in non-plan expenditure in the wake of a grim economic scenario, with little room to shore up revenues. This will lead to restrictions on foreign travel by officials and ban on new posts and holding meetings in five-star hotels.

The cuts will, however, exclude defence expenses, salary payments, pensions and other grants. Payment of interest on debt will also be exempt, the Finance Ministry said in a statement on Wednesday.

Besides, ministries and government departments have been asked not to buy vehicles until further orders.

Officials, barring top bureaucrats, have been banned from executive class air travel. They have also been directed to restrict the size of delegations going abroad to “an absolute minimum.”
The steps are purported to help the Finance Ministry stick to its fiscal deficit target of 4.8 per cent of the gross domestic product (GDP) in 2013-14.

Achieving the target has become difficult with rising costs of certain essential imports, falling rupee and an increase in the government’s spending on subsidies.

“Such measures are intended at promoting fiscal discipline, without restricting the operational efficiency of the government. In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimise available resources,” according to the statement.

The measures come less than a fortnight of Finance Minister P Chidambaram hinting at a similar drive during a debate on supplementary demand for grants in Parliament. “We will have to take some hard decisions. Many of these measures are being taken and many measures will be announced in next few days and weeks,” he had said.

The fiscal deficit reached 62.8 per cent of the budgeted target in the first five months of the fiscal 2014.

Last year, the government undertook several austerity measures, including a hefty cut in plan expenditure of Rs 93,000 crore. The measures, which came on November 12, 2012, also barred ministries from spending more than one-third of the total annual outlay in the last quarter. Instructions were also issued on November 1 and in May 2012.

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