Keeping in mind lower revenue realisation till date, the Finance Ministry has issued new austerity measures, including 10 per cent cut in non-Plan expenditure and ban on creation of new posts.
“For the year 2014-15, every Ministry/Department shall effect a mandatory 10 per cent cut in non-Plan expenditure excluding interest payment, repayment of debt, Defence capital, salaries, pension and Finance Commission grants to the States, ” an office memorandum issued by the Expenditure Department of the Finance Ministry said.
Even in the last few years, such measures were announced. However, it has never specified the amount of saving through such measures.
On tour and travel, the Government has made it clear that Government officials will not travel in first class. “While officers are entitled to various classes of air travel depending on seniority, utmost economy would need to be observed while exercising the choice keeping the limitations of budget in mind. However, there would be no bookings in First Class," it said.
It also advised that in all cases of air travel, the lowest air fare tickets available for entitled class are to be purchased. No companion free ticket on both domestic and international travel is to be availed of. “Facility of video conferencing may be used effectively,” it said.
Creation of new post
On creation of new post, it said that there will be a ban on creation of Plan and Non-Plan posts. At the same time, posts that have remained vacant for more than a year are not to be revived except under very rare and unavoidable circumstances and after seeking the clearance of Expenditure Department.
Giving logic for such measures, the memorandum said that these 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,” it said.
Indirect tax collection
These measures have been announced after indirect tax collection grew mere 5.8 per cent during first six months of the current fiscal against the budgeted target of 25.8 per cent.
Though gross direct tax collection registered a growth of 15 per cent in line with the budgeted target of 15 per cent, the rate of growth for net collection (gross collection minus refund) was mere 7 per cent.
On non-tax revenue, good news is that lower crude prices and de-regulation of diesel prices is expected to have a very positive impact on subsidy payout. However, the Government is yet to kick off disinvestment plan.