Govt to cut 20% wasteful expenses to control fiscal deficit

In a stern move to avoid fiscal downfall, the Union government is set to cut down wasteful expenditure on several items including travel and food by 20 percent.

According to a report in The Indian Express, the decision was taken during the recent Cabinet Committee meeting on Investment and Growth (CCIG), chaired by Prime Minister Narendra Modi.

The CCIG which was constituted in June last year includes Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Defence Minister Rajnath Singh, Road Transport and Highways Minister Nitin Gadkari, and Railways Minister Piyush Goyal as members.

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A source told The Sunday Express that all the ministries have been directed to reduce wasteful expenditure and take necessary actions to implement the same. it was also learned that the minutes of the meeting were circulated last week to the concerned ministeries for follow-up action.

“All ministries have been directed to reduce wasteful expenditure on travel, food, and conferences by 20 percent. The CCIG has asked the Department of Expenditure, Ministry of Finance, to take necessary action in this regard,” a source said.

The move could be one of the first attempts by the Centre to control fiscal deficit within the budgeted 3.3 percent target during the financial year 2019-20 and avoid the fiscal drop by containing non-development expenditure.

Meanwhile, the real challenge for the Union government will be to maintain the fiscal discipline as, during the ongoing fiscal, the GDP growth is expected to slow down to an 11-year low of 5 percent.

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In October 2014, the Department of Expenditure had directed other ministries to slash non-Plan expenditure by 10 percent and observe the economy while organising exhibitions, seminars, and conferences, so as to reduce the expense of purchasing vehicles and travel.

This is not the first time when the Centre is looking towards implementing certain austerity measures.

“Such [austerity] 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 optimise available resources”: stated an order issued by the then Secretary (Expenditure) Ratan P Watal on October 29, 2014.

The committee’s first meeting in the last week of December 2019, also decided on reviewing the Foreign Direct Investment (FDI) policy and identifying infrastructure projects for ₹100 lakh crore investment programme which was announced by the Prime Minister in his Independence Day speech last year.

While the Union Finance Minister unveiled infrastructure projects of ₹102 lakh crore to be spanned over the next five years, other actionable decisions are yet to be announced.