The Finance Ministry has told ministries to slash ‘controllable’ spending by 20% and drop other wasteful expenditure, introducing fresh austerity steps amid concerns with breaching the fiscal deficit target for the year following the second COVID-19 wave.
Expenditure related to containment of COVID-19 is excluded from the scope of this order. A suggestive list of object heads of controllable expenditure has been shared, that includes advertising and publicity, foreign and domestic travel, office and administrative expenses and overtime allowance.
“The government has decided that all ministries take steps to curb wasteful expenditure and aim for a 20% reduction in controllable expenditure,” the Department of Expenditure wrote in a memo, approved by Finance Secretary T.V. Somanathan, to all ministries.
Base year
Urging departments to take steps to curtail all avoidable non-scheme expenditure, the memo has told them to take the expenditure incurred in 2019-20 as the base for this purpose.
The Expenditure Department has been directed to review the progress in the matter. The other items where spending may be controlled are general grants-in-aid, royalty payments, publications, rents and taxes, ration costs, clothing and tentage, minor works and maintenance.
Separately, ministries have also been told to expedite appraisals and clearances for schemes in their domains that need to be extended beyond March this year. Ministries that are yet to seek the requisite expenditure clearances have been given till July to do so, in order to secure funds.
“No further extension to ongoing schemes and release of funds will be allowed,” said the Expenditure Department.
