Govt calls for austerity steps to fight drought

The Union government has asked ministries to cut some non-Plan expenditure by 10 per cent and some others by 5 per cent in view of the current fiscal situation arising out of insufficient rains in large parts of the country, and the consequent pressure on the government's resources.

Contrary to the stimulus provided in January, when the government announced purchase of new vehicles by its departments, a notification issued today said purchase of vehicles, except for operational requirements of the defence forces, central paramilitary forces and security-related organisations, would not be allowed.

A senior finance ministry official earlier told Business Standard that the central ministries had also been asked to adhere to strict norms when it comes to releasing funds under various central government schemes.

"Besides, they have been asked not to approve any fresh funds involving expenditure below Rs 150 crore (Rs 1.5 billion). Ministries are authorised to spend below Rs 150 crore without seeking prior approval from the government," said the official.

Underscoring the cut, the finance ministry notification said there was need for further economy and rationalisation of expenditure. For 2009-10, all ministry and departments have been asked to cut expenditure on domestic and foreign travel expenses, publications, professional services, advertising and publicity, office expenses, fuel except for security-related requirement and other administrative expenses by 10 per cent.

The remaining portions of non-Plan expenditure, excluding interest payments, repayment of debt, defence capital, salaries, pension and the Finance Commission grants to the states, will be subjected to a mandatory 5 per cent cut. "No re-appropriation of funds to augment the non-Plan heads of expenditure shall be allowed during the current financial year. No increases in the budgetary allocations under the heads of non-Plan expenditure, particularly where cuts are being imposed, will be allowed at the revised estimate stage, except under very extraordinary and compelling circumstances," said the notification.

Setting ceilings on expenditure like seminars and conferences, and holding exhibitions, seminars and conferences abroad has been discouraged except in the case of exhibitions for trade promotion, while there will be a complete ban on holding meetings and conferences at five-star hotels.

No travel on government account by air will take place by first class. All domestic travel on government account by air will take place only by economy class, irrespective of the entitlement.

Where travel is unavoidable, it will be ensured that officers of the appropriate level dealing with the subject are sponsored instead of those at higher levels. The size of delegation and the duration of visit will be kept to the absolute minimum.

Proposals for participation in study tours, workshops and conferences, and presentation of papers abroad at government cost would not be entertained except those which were fully funded by sponsoring agencies, said the notice.