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Govt launches economy drive to contain public expenditure
July, 12th 2011

Launching the drive to contain public expenditure, the government today asked ministries and departments to restrict foreign travel and refrain from holding meetings in five-star hotels.

The ministries have also been asked not to purchase new vehicles or create new posts, except for organisations which are to be set up during the course of the year.

"It would be the responsibility of the secretary of each ministry/department to ensure that foreign travel is restricted to most necessary and unavoidable official engagements based on functional necessity," said an official memorandum issued by the Finance Ministry.

Economy and rationalisation of expenditure, it added, was necessary to "carry on the process of fiscal consolidation vigorously and to meet the fiscal and revenue deficit targets announced in the budget for 2011-12."

Elaborating on travel restrictions, it said officials at appropriate levels involved with the relevant subjects should be sponsored for foreign trips, instead of those at higher levels. "The size of delegation and the duration of visit will be kept to the absolute minimum," it added.

The government further said that officials will not go abroad on study tours, workshops, conferences and presentation of paper at government expenses. Only those whose visit is funded by sponsors would be permitted to travel abroad.

According to the memorandum, "There will be a ban on holding meetings and conferences at five star hotels." Holding of exhibitions, seminars and conferences abroad, it added, should be "strongly discouraged" except in cases of exhibitions for trade promotion.

The initiative comes at a time when the Government is aiming to keep its fiscal deficit at 4.6% and the revenue deficit at around 3% in 2011-12.

Expenditures are under pressure due to high global crude prices, and the centre is going to lose Rs 24,000 crore of revenue during the July-March period of this fiscal due to the recent duty cuts.

The memorandum said, "There will be a total ban on creation of Plan and non-Plan posts except for new organisations which are set up during the course of the current year based on already approved schemes."

It also said no new vehicles will be purchased except for operational requirements of defence and paramilitary forces and other organisations involved in security operations.

The ministries and departments have been asked to engage consultants only in situations where "high quality services for which the concerned Ministry/Department does not have requisite expertise."

With regard to transfer of money to states, public sector undertakings and autonomous bodies, it said that no amount shall be released to any entity which has defaulted in furnishing utilisation certifications for grants-in-aid released by the central government without prior approval of the Finance Ministry.

"The state governments are required to furnish monthly returns of Plan expenditure, central, centrally-sponsored or state plan to respective ministries/departments along with a report of amounts outstanding in their public account of central and centrally sponsored schemes," it said.

The ministry added that the unspent balances available with the states and implementing agencies must be taken into account before further releases are made.

It said, "The sanction for payment must clearly specify either that the payee has no utilisation certifications as due for rendition' under the rules under the scheme in question or that the payment has been authorised by department of Expenditure.

"The Chief Controller of Accounts must ensure compliance with the above as part of the pre-payment scrutiny." The Finance Ministry also asked that more of the allocated funds should be spent during the beginning of the financial year, and said the rush of expenditure towards the end of the financial year is a matter of concern.

"Not more than one-third (33%) of the Budget estimates may be spent in the last quarter if the financial year," it said.

Besides, the ministries and departments have been asked to limit their spending to 15% of the Budget estimates during March, the last month of the fiscal.

Ministries have also been asked to adhere to the Monthly Expenditure Plan. "It is also considered desirable that in the last month of the year payments may be made only for the goods and services actually procured and for reimbursement of expenditure already incurred," it said.

The ministries and departments have been asked to submit an overall report on compliance on a quarterly basis.

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