Government Announces Measures for Fiscal Prudence and Economy; Every Ministry / Department to Effect A Mandatory 10% Cut in Non-Plan Expenditure; Utmost Economy to be Observed in Organizing Conferences/Seminars/Workshops; Ban on Purchase of Vehicles; in all Cases of Air Travel, the Lowest Air Fare Tickets Available for Entitled Class to be Purchased/Procured.

 No. 7(1)/E.Coord./2014
Government of India
Ministry of Finance
Department of Expenditure

North Block
New Delhi, 29 th October, 2014

OFFICE MEMORANDUM

Subject: Expenditure Management-Economy Measures and Rationalisation of Expenditure

Ministry of Finance. Department of Expenditure has been issuing austerity instructions from time to time with a view to containing non-developmental expenditure and releasing of additional resources for priority schemes. The last set of instructions was issued on 18’h September 2013 after passing of the Union Budget. Such measures are intended at promoting fiscal discipline, without restricting the operational efficiency of the Government In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimize available resources. With this objective, the foil owing measures for fiscal prudence and economy will come into immediate effect:-

2.1 Cut in Non-Plan expenditure:
For the year 2014-15, every Ministry I Department shall effect a mandatory I 0% cut in non-Plan expenditure excluding interest payment, repayment of debt, Defence capital, salaries, pension and Finance Commission grants to the States. No re-appropriation of funds to augment the Non-Plan heads of expenditure on which cuts have been imposed shall be allowed during the current fiscal year.

2.2 Seminars and Conferences

(i)    Utmost economy shall be observed in organizing conferences/ Seminars/workshops. Only such conferences, workshops, seminars, etc. which are absolutely essential, should be held wherein also a 10% cut on budgetary allocations (whether Plan or Non-Plan) shall be effected.

(ii)    Holding of exhibitions/fairs/seminars/conferences abroad is strongly  discouraged except in the case of exhibitions for trade promotion

(iii)   There will be a ban on holding of meetings and conferences at five star  hotels  except  in  case  of  bilateral/multilateral  official engagements to be held  at the level  of Minister-in-Charge  or Administrative Secretary,  with foreign Governments or international bodies of  which India is a Member. The Administrative Secretaries are advised to exercise utmost discretion in holding such meetings in 5-Star hotels keeping in mind the need to observe utmost economy in expenditure.

2.3   Purchase of vehicles:

Purchase of new vehicles to meet the operational  requirement of Defence Forces, Central   Paramilitary Forces & security: related organizations are permitted. Ban on purchase of other vehicles  (including staff cars) will continue except against condemnation.

2.4   Domestic and International Travel:

(i)    Travel expenditure {both Domestic Travel Expenses (DTE) and Foreign  Travel  Expenses(FTE)}  should be regulated  so as to ensure that each Ministry remains within the allocated budget for  the same after taking into account the mandatory 10% cut under  DTE/FTE (Plan as well as Non-Plan). Re-appropriation! augmentation proposals on this account would not be approved

(ii)    While officers are entitled to various classes of air travel depending on seniority, utmost economy would need to be observed while exercising the choice keeping the limitations of budget in mind. However, there would be no bookings in First Class.”

(iii)   Facility of Video Conferencing may be used effectively. All extant   instructions  on  foreign  travel   may  be  scrupulously followed.

(iv)   In all cases of air travel the lowest air fare tickets available for entitled class are to be purchased/ procured. No companion free ticket on domestic/ international travel is to be availed of.

   3. Creation of Posts

(i)    There will be a ban on creation of Plan and Non-Plan posts.

(ii)    Posts that have remained vacant for more than a year are not to be  revived except under very rare and unavoidable circumstances and after seeking clearance of Department of Expenditure.

  3. Observance of discipline in fiscal transfers to States, Public Sector Undertakings and Autonomous Bodies at Central/ State/Local level:

3.1   Release of Grant-in-aid shall be strictly as per provisions contained in GFRs and in Department   of Expenditure’s OM No.7(1)/E.Coord/2012 dated 14.11.20!2

3.2   Ministries/Departments shall not transfer funds under any Plan schemes in relaxation of conditions attached to such transfers (such as matching funding).

3.3   The State Governments are required to furnish monthly returns of Plan expenditure – Central, Centrally Sponsored or State Plan – to respective Ministries/Departments along with a report on amounts outstanding in their Public Account in respect of Central and Centrally Sponsored Schemes. This requirement may be scrupulously enforced.

3.4   The Chief Controller of Accounts must ensure compliance with the above as part of pre-payment scrutiny.

4. Balanced Pace of Expenditure:

4.1   As per extant instructions, not more than one-third (33%) of the Budget Estimates may be spent in the last quarter of the financial year. Besides, the stipulation that during the month of March the expenditure should be limited to 15% of the Budget Estimates is reiterated. It may be emphasized here that the restriction of 33% and 15% expenditure ceiling is to be enforced both scheme-wise as well as for the Demands for Grant as a whole, subject to RE ceilings. Ministries/ Departments which are covered by the Monthly Expenditure Plan (MEP) may ensure that the MEP is followed strictly.

4.2   lt is also considered desirable that in the last month of the year payments may be made only for the goods and services actually procured and for reimbursement of expenditure already incurred. Hence, no amount should be released in advance (in the last month) with the exception of the following:

(i)     Advance payments to contractors under terms of duly executed contracts so that Government would not renege on its legal or contractual obligations.

(ii)    Any loans or advances  to Government  servants etc. or private individuals as a measure of relief and rehabilitation as per service conditions or on compassionate grounds.

(iii)   Any  other  exceptional  case with the  approval  of the Financial Advisor. However, a list of such cases may be sent by the FA to the Department of Expenditure by 30th April of the following year for information.

4.3   Rush of expenditure on procurement should be avoided during the last quarter of the fiscal year and in particular the last month of the year   so as to ensure that all procedures are complied with and there is no infructuous or wasteful expenditure. FAs are advised to specially monitor this aspect during their reviews.

  1. No fresh financial commitments should be made on items which are not provided for in the budget approved by the Parliament
  2. These instructions would also be applicable to autonomous bodies funded by Government of India.

7. Compliance

Secretaries of the Ministries I Departments. being the Chief Accounting Authorities as per Rule 64 of GFR. shall be fully charged with the responsibility of ensuring compliance of the measures outlined above. Financial Advisors shall assist the respective Departments in securing  compliance with these measures and also submit an overall report  to  the  Minister-in-Charge  and  to the Ministry of Finance on a quarterly basis  regarding various actions taken on these measures/guidelines

(Ratan P. Watal)

Secretary(Expenditure)

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