Post the country’s dismal Q1 GDP report card in 2012 which reported the slowest growth in nine years, the Finance Ministry, on Thursday, announced a slew of austerity measures to curp spending, reports said.
However, analysts are of the opinion that the measures may not be sufficient.
According to the circular issued by the Ministry, “For the year 2012-13, every Ministry/Department shall effect a mandatory 10% cut in non-Plan expenditure, excluding interest payment, repayment of debt, Defence capital, salaries, pension and Finance Commission grants to the States.”
The total non-Plan expenditure for the current fiscal is proposed is Rs.9.69tn.
The excluded categories comprise about 72% of India's non-plan expenditure, estimated at Rs.9.7 rupees for the current 2012/13 fiscal year, reports said citing Nitesh Ranjan, an economist at the Union Bank of India.
The circular said there was urgent need for rationalisation of expenditure and optimisation of available resources as there was tremendous pressure on Government's resources in the current fiscal situation.
There will be total ban on creation of Plan and non-Plan posts. The Government has also banned holding of meetings and conferences in five-star hotels.
There will also be 10% cut on the Budgetary allocation for seminars and conferences.
Purchase of vehicles will not be allowed until further orders. Also, there will be no purchase against condemned vehicles.
The circular also stated that proposals for participation in study tours, workshops, conference, seminars and presentation of papers abroad at Government cost will not be entertained. However, fully-sponsored trips will be exempted.
The austerity measures come as the troubled government struggles to curb fiscal deficit, which overshot the FY12 target of 4.8% to stand at 5.95% of GDP.