New austerity measure by government, announces 10% cut in non-plan expenditure.

On 30th October 2014, Finance Ministry has announced new mandatory austerity measures.
Government aims to restrict fiscal deficit to 4.1 per cent of GDP in 2014-15 and hence, have taken up such steps. Thus it will lead to10 per cent cut in the Centre’s non-Plan expenditure for 2014-15.
Austerity measures taken up by the ministry are:

  • The main objective of the fiscal prudence and economy measures was the need to rationalise expenditure and optimise available resources.
  • It bans ministers from holding meetings in five-star hotels and traveling in first class of airlines.
  • Ban on fresh appointments and filling of posts that have been vacant for over a year.
  • Officials have been advised to exercise economy in booking air tickets and have been encouraged to use video-conferencing instead of making trips where ever possible.
  • Officials would also not be permitted to get free companion tickets for domestic or international travel.
  • All departments must avoid bunching up expenditure in the last quarter to ensure that there is no wasteful spending
  • Subsidies part of the non-plan expenditure will face the brunt of the cuts in the new measures.
  • However, other components of the non-plan expenditure as interest payment, repayment of debt, defence capital, salaries, pension or Finance Commission grants to States will not face the cut.



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