The Hindu : National : Centre takes belt-tightening steps

Online edition of India's National Newspaper
Wednesday, Sep 29, 2004

National

National

Centre takes belt-tightening steps

By Our Special Correspondent

NEW DELHI, SEPT. 28. The Central Government's austerity measures announced here today include a mandatory 10 per cent cut in the budgetary allocation for non-development, non-salary expenditure, including overtime allowance and honorarium. The existing ban on the creation of posts involving development and non-development work will continue. Besides, all existing instructions regarding the abolition of posts are to be strictly complied with and every Ministry and Department has to undertake a review of all posts lying vacant. No vacant posts are to be filled till the review is completed, the instructions stipulate.

The measures aim to save an annual expenditure of over Rs. 2,000 crores.

It has also been announced that there will be no fresh financial commitment on items not included in the budget approved by Parliament and, pending review, no funds will be released to autonomous bodies having substantial unutilised balances at their disposal. Besides, a graded reduction of five per cent per annum in each successive year is to be effected on 100 per cent deficit grants being given at present to autonomous bodies.

No deviation

There will also be a complete review and evaluation of all on going development and non-development programmes and schemes by the end of this calendar year to determine their continued relevance. No deviation of expenditure will be allowed from the prescribed budgetary ceilings. Also, budget formulation henceforth will lay a greater emphasis on explicit recognition of the revenue constraints and a realistic projection of the budgetary allocations for various projects and schemes. Rigid adherence to budgetary ceilings will be enforced and normally, no additional funds to any Ministry or Department will be provided at the revised estimate stage.

Foreign travel

Foreign travel is to be restricted to unavoidable official engagements, with a total ban on foreign travel for study tours, seminars, workshops, etc. Henceforth, foreign visits will be allowed only for annual and other formal meetings of bilateral and multilateral bodies such as the World Bank, the International Monetary Fund, the World Health Organisation, the International Labour Organisation, the Joint Commissions, etc. Besides, the size of the official delegations is to be restricted to the bare minimum. The rate of per day allowance for travel abroad for all categories, officials, non-officials belonging to the Government will continue to be lower by 25 per cent as at present. At the same time, the utmost austerity has to be observed in organising conferences, seminars and workshops by the Government, the instructions say.

Use of official cars

The instructions stipulate that the utmost economy is to be exercised in use of official cars and reduction in expenditure by 10 per cent on petrol, oil, lubricants and travel. Besides, purchase of all new vehicles by the Government are to be banned until further orders, except for meeting the operational requirements of Defence, Central Para Military forces, etc. New vehicles are not to be purchased even as replacement of condemned vehicles and hiring of vehicles from outside is to be limited to the number of condemned vehicles.

Austerity has to be observed in furnishing of offices and the office at the residence has to be absorbed.

Dividend of 20 per cent

On the revenue side, the Government has stipulated that all profit-making public sector enterprises must declare a minimum dividend of 20 per cent on equity or a minimum dividend payout of 20 per cent of post-tax profits, whichever is higher. Oil, petroleum, chemical and other infrastructure sectors will have to declare a minimum post-tax profit of 30 per cent.

All profit-making PSE companies will have to consider issuing bonus shares to the Government and all profit-making joint venture companies have been asked to make concerted efforts to give a dividend of 20 per cent on Government equity holding. Other non-tax receipts are to be revised to ensure recovery of the cost of services at least. The instructions also stipulate that timely repayment of loans provided by the Government to the public sector undertakings and payment of fees and charges to the Government have to be ensured.

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