No.7(1)/E.Coord/2012
GOVERNMENT OF
INDIA
MINISTRY OF FINANCE
DEPARTMENT OF EXPENDITURE
New Delhi dated:
31st May, 2012
OFFICE
MEMORANDUM
Subject: Expenditure Management-Economy measures and rationalization of
expenditure
With a view to
containing non-developmental expenditure and thereby releasing additional
resources for meeting the objectives of the priority schemes, Ministry of
Finance has been issuing guidelines on austerity measures in the government from
time to time.
In the context of
the current fiscal situation where there is a tremendous pressure on
government’s resources, there is an urgent need for rationalization of
expenditure and optimization of available resources with a view to improve the
macroeconomic environment. With this
objective, the following measures for fiscal prudence and economy will come into
force with immediate effect :-
For the year
2012-13, every Ministry/Department shall effect a mandatory 10 % cut in non-Plan
expenditure excluding Interest payment, repayment of debt, Defence capital,
salaries, pension and the 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 and even there a 10 % cut on budgetary allocations for
seminars/conferences shall be effected.
ii) Holding fo
exhibitions/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.
2.3
Purchase of vehicles
i)
Purchase of vehicles is banned until further orders, including against condemned
vehicles.
2.4
Foreign travel
i) It would be
responsibility of the Secretary of each Ministry/Department to ensure that
foreign travel is restricted to most necessary and unavoidable Official
engagements based on functional necessity and extant instructions, including on
the number of visits, are strictly followed.
ii) where travel
is unavoidable, it will be ensured that officers of the appropriate level
dealing with the subject are sponsored instead of those at higher levels. The
size of the delegation and duration of visit will be kept to the absolute
minimum.
iii) proposals for
participation in study tours, workshops/ conferences/ seminars/ presentation of
papers abroad at government cost will not be entertained except those that are
fully funded by sponsoring agencies.
iv) Foreign visits
should be so regulated as to ensure that each ministry remains within the
allocated budget (after 10 % cut) for the same. Re-appropriation proposals on
this account would not be approved.
2.5
Creation of posts
There will be a
total ban on creation of Plan and Non-Plan posts.
3.1 No amount
shall be released to any entity (including state Governments), which has
defaulted in furnishing Utilisation Certificates for grants-in-aid released by
the Central Government without prior approval of the Ministry of
Finance.
3.2
Ministries/Departments shall not transfer funds under any Plan schemes in
relaxation of conditionalities 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 following
specific steps may be adopted :
a) The
unspent balances available with the states and implementation agencies must be
taken into account before further releases are made.
b) The sanction
for payment must clearly specify either that the payee has no utilization
certifications as ‘due for rendition” under the Rules under the Scheme in
question or that the payment has been authorised by Department of
Expenditure.
c) for any
deviation from the above, the case should be referred to the Department of
Expenditure.
d) The Chief
Controller of Accounts must ensure compliance with the above as part of
pre-payment scrutiny.
4.1 Rush of
expenditure towards the end of the financial year continues to be an area of
concern. As per the 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.
Ministries/Departments which are covered by the Monthly
Expenditure Plan (MEP) may ensure that the MEP is folowed strictly.
4.2 It 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. FA’s are advised to specially monitor this aspect during their
reviews.
Secretaries of the
Ministries/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.
(Sumit
Bose)
Secretary( Expenditure
)
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