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Modi govt goes into austerity overdrive

Modi govt goes into austerity overdrive
Highlights

For the current fiscal, the government has proposed a Plan expenditure of Rs 5.75 lakh crore, while that for non-Plan expenditure is over Rs 12.19 lakh crore.

New Delhi: As part of the drive to cut down on non-plan expenditure by 10 per cent to reduce fiscal deficit to a 7-year low of 4.1 per cent of GDP, the Central government on Thursday announced several measures. Restrictions have been imposed on foreign travel by bureaucrats and conferences in 5-star hotels.

"In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimise available resources," the Finance Ministry said in an office memorandum.

The austerity measures include a bar on government officials from first class air travel on overseas visits, a bar on holding meetings in five-star hotels and instructions to departments to avoid holding seminars abroad. The government proposes to lower the fiscal deficit to 3 per cent of GDP by 2016-17. The deficit which had touched a high of 5.7 per cent in 2011-12, was brought down to 4.8 per cent in 2012-13 and further to 4.5 per cent in 2013-14 by way of austerity measures.

For the current fiscal, the government has proposed a Plan expenditure of Rs 5.75 lakh crore, while that for non-Plan expenditure is over Rs 12.19 lakh crore.

"The task before me is very challenging because we need to revive growth, particularly in manufacturing sector and infrastructure," Finance Minister Arun Jaitley had said in his budget speech.

"There will be a ban on holding of meetings and conferences at five star hotels except in case of bilateral or multilateral official engagements to be held at the level of minister-in-charge or administrative secretary, with foreign governments or international bodies of which India is a member," the ministry said.

Hereafter, foreign tours will need prior clearance of the Prime Minister's Office.

Purchase of new vehicles to meet operational requirement of defence forces, paramilitary forces and security organisations are permitted but ban on purchase of any other vehicles would continue.

The ministry has also put a freeze on fresh appointments and filling up of posts lying vacant for over a year. Interest and debt payments, the defence budget, salaries and pensions would not be affected by these steps, it said.

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