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Measures to prune non-plan spending

New Delhi, May 31: The government today announced a series of austerity measures in a bid to cut its non-plan expenditure by 10 per cent during the current fiscal.

Meetings at five-star hotels as well as the creation of new posts have been banned, while restrictions have been imposed on foreign travel.

The budget had estimated the non-plan expenditure at Rs 9.69 lakh crore.

The cut, however, excludes interest payment, debt repayment, defence capital, salaries, pensions and grants to states, according to finance ministry officials.

“I am going to issue some sort of austerity measures... whether people like it or not... to convey a signal that we are responding to the situation…we are not pressing the panic button,” finance minister Pranab Mukherjee had earlier said in the Rajya Sabha.

“There will be a ban on holding meetings and conferences in five-star hotels... purchase of vehicles is banned until further orders,” the finance ministry directive said.

On foreign travel, it said, the size of the delegation and the duration of the visit would be kept to “absolute minimum”.

Besides, no amount would be released to any entity, including state governments, which had defaulted in furnishing utilisation certificates for grants-in-aid released by the central government without prior approval of the finance ministry.

The government’s fiscal deficit in 2011-12 was 5.7 per cent of the GDP. The Centre aims to bring it down to 5.1 per cent in the current fiscal. It is targeting to cut the subsidy bill to below 2 per cent of GDP this fiscal and 1.75 per cent in the subsequent years.

While the government is looking to reduce its overall spending, an alarmed India Inc today demanded a revival package to put the economy back on a higher growth track.

“A comprehensive economic revival package has to be announced at the earliest,” Chandrajit Banerjee, director-general of the Confederation of Indian Industry, said.

Rajiv Kumar, secretary-general of the Federation of Indian Chambers of Commerce and Industry, said, “This is the fourth straight quarter of decline and quarterly growth dipped to the same level during Q3 of 2008-09 (5.6 per cent). Ficci had forewarned in April that the Q3 growth did not represent the bottoming out of the economy.”

Assocham president Rajkumar Dhoot said, “The investment environment should be improved and this may even call for some review of tax proposals and further relaxation of FDI norms.”

 
 
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