Finance Ministry issues cost-cutting instruction to ministries/depts amid fiscal pressure

Amid intense pressure on the treasury due to falling revenues and sinking economic growth, the Centre on Friday asked all central govt ministries/departments to review appointments of consultants, curtail functions and ban the use of imported paper for printing as part of measures to rationalise non-priority expenditure.

The Ministry of Finance has issued instructions on expenditure management with a view to improving the quality of public expenditure, containing non-developmental spending and ensuring the availability of adequate resources for critical priority schemes, the Department of Expenditure said in an official memo.

"In the context of the present fiscal situation and the consequent pressure on Government resources, there is a need for further economy and rationalisation of non-priority expenditure, while protecting and preserving priority expenditure," the memo said.

Measures to curb administrative expenditure

With regard to administrative expenditure, the Department said no printing or publishing of books, publications, documents will be done on imported paper, except where printing is done abroad by Indian missions. It has asked offices to discourage or appropriately curtail expenses on functions such as celebrations of Foundation Day etc. In any case, travel for such functions and provision of bags or mementos should be avoided, the ministry said.

It asked all the ministries/departments to carry out a review of the individual consultants appointed by them in consonance with the provisions of General Financial Rules (GFR) and reduce the number of consultants to the minimum requirement. "Due economy may be observed while determining the fees of the consultants and care may be taken that such fees are not disproportionate to the quality and quantity of work to be carried out by the consultants," it added.

No new posts without approval

Moreover, the Finance Ministry has instructed that there will be a ban on the creation of new posts, except with the approval of the expenditure department of the concerned Ministry.

"If any post has been created after July 1, 2020, under delegated powers or authority, without approval of Expenditure Department and have not yet been filled, then shall posts shall not be filled. If it is deemed absolutely essential to fill them, proposals may be sent for approval of Department of Expenditure," the memo added.

The order tasks Secretaries of Ministries/departments to ensure compliance of these instructions while financial advisers shall assist respective departments in securing compliance. 

Earlier this week, the Centre had asked ministries/departments/PSUs and public sector banks not to print calendars, diaries, greeting cards and schedulers in physical format henceforth. It also banned the printing of coffee-table books and instead encouraged the use of e-books.

READ | Calendars, Diaries, & Other Materials To Shift On Digital Format: Ministry Of Finance

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Why such austere measures?

The government treasury is facing acute strains as the coronavirus-induced lockdown that lasted for over five months has stumped out economic activity and thereby dried up tax revenues. Data released earlier this week revealed that gross revenue from Goods and Services Tax (GST) in August dipped 12% from last year to Rs 86,449. Since March, GST collections have remained below the targeted one-lakh crore mark. Moreover, revenue from direct tax collection and trade tariffs are also expected to remain subdued.

The Indian economy contracted by a record 23.9% in the first quarter (April-June) of 2020, GDP estimates released on Monday revealed. All sectors, barring agriculture, contracted steeply, although as lockdown restrictions ease, hope is the slide will decline.

(With PTI inputs) (PTI Photo)

READ | GST Revenue At Rs 86,449 Crore In August, Down 12% From Same Month Last Year

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