The fresh guidelines will be applicable for the current fiscal. The cut will be applicable on the estimated Rs 60,000 crore of non-Plan expenditure in fiscal 2008-09, said Expenditure Secretary Sushma Nath. However, she did not specify the exact quantum of savings that would result from these austerity measures.
Central government ministries and departments have been asked to effect a 10 per cent cut in non-plan expenditure under heads like overtime allowance except for industrial establishments, domestic and foreign travel expenses, publications, professional services, advertising and publicity among others. The remaining portion of the non-plan expenditure will be subjected to a mandatory 5 per cent cut. The practice of holding meetings and conferences at five star hotels has also been discontinued.
However, the guidelines will not be applicable to interest payment, repayment of debt, defence capital, salaries, pension and the Finance Commission grant to the states.
Revenue Secretary P V Bhide had on Wednesday said the Central government is projected to incur a revenue loss of Rs 22,660 crore in the current fiscal on account of the duty cuts on crude oil.
Today, Nath said the fresh guidelines are not aimed at saving cost, but intend to ensure fiscal discipline in government expenditure.
The Finance Ministry also asked central government deparments to limit the advance payment for any project or acquisition to 10 per cent of the approved financial outlay in the current fiscal. Subsequent payments are also need to be related to deliverables. This will be applicable where expenditure is effected through a contract while advances to grant-in-aid to institutions are not included within the ambit of this restriction.
To ensure effective monitoring of the guidelines, secretaries of central government departments have been asked to carry out monthly review of their non-Plan expenditures. To further tighten the noose, the Cabinet Secretary has been authorised to hold a meeting with the secretaries of defaulting ministries and departments once in every quarter.
