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Austerity Measures To Help Cut Spending: FM

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Faced with rising oil and food subsidy, Finance Minister Pranab Mukherjee said on Wednesday the austerity measures, like curbs on foreign travel, will help government save "wasteful expenditure". "I am quite confident that some wasteful expenditure will be saved," Mukherjee said adding a similar exercise to check government expenses in the past had paid dividends. In a communication to ministries and departments on July 11, the Finance Ministry had said there would be a ban on holding seminars and conferences in 5-star hotels and that foreign travels would be undertaken only in necessary and unavoidable cases. Besides, there is a ban on creation of jobs in the government. The government faces a challenging task to keep fiscal deficit target at 4.6 per cent of the GDP in 2011-12. "...last time when we had the austerity measures a couple of years back, we had good dividends and let us see how does it work (this time)," the Finance Minister said. In September 2009, the government had put several restrictions on expenditure. These included instructions to ministers to fly in the economy class, leading to some resentment and the controversial "cattle class" remark by then Minister of State for External Affairs Shashi Tharoor. Due to volatility in global crude prices, the government's subsidy on fuel is likely to increase. It spends about Rs 73,637 crore a year on fuel and fertiliser subsidies. It plans to spend about Rs 82,000 crore on food subsidy this fiscal which may go up to Rs 95,000 crore once National Food Security Act comes into play. Besides, the government is expected to lose around Rs 36,000 crore during the current fiscal on account of duty cuts on petroleum products. On the other hand, the government may find it difficult to mop up Rs 40,000 crore from sale of equity in the public sector companies during the 2011-12 financial year. Austerity measures were announced to ensure availability of adequate resources for meeting the development and priority schemes, the Finance Ministry had said. (PTI)