Finance ministry directive puts babus on austerity diet

A finance ministry memorandum on Monday asked all ministries and departments to cut expenditure by 10 per cent, given the gathering drought and the state of public finances.

A finance ministry memorandum on Monday asked all ministries and departments to cut expenditure by 10 per cent, given the gathering drought and the state of public finances.

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Travel, bringing out official publications, engaging professional services, advertising and publicity are among the areas named in the memo where expenses should be reduced. Other, more crucial areas too, with a few exceptions, face a 5 per cent cut.

“All domestic travel on government account by air will take place only by economy class, irrespective of the entitlement,” the memo said. It has put a complete ban on holding conferences in five-star hotels and buying new vehicles, except for the defence and security forces.

The government has estimated the fiscal deficit at Rs 4 lakh crore or 6.8 per cent of the gross domestic product this year. More than half the districts of the country have been declared drought affected.