Austerity drive to cut wasteful expenses: Pranab

Last Updated: Tuesday, July 12, 2011 - 14:51

New Delhi: Justifying the government`s
austerity drive, Finance Minister Pranab Mukherjee on Tuesday said
the restrictions on foreign visits and other expenses are
aimed at curbing wasteful expenditure and containing fiscal
deficit.

"I sent a note (on austerity in government departments)
and Prime Minister has approved in certain areas where I
considered that wasteful expenditure should be avoided and
that money should be deployed for developmental work," he told
a press conference.

Amidst increasing subsidy on food, fertiliser and fuel,
the government yesterday asked ministries and departments to
restrict foreign travel and refrain from holding meetings in
five-star hotels with a view to reducing public expenditure.

The government has also advised the ministries not to buy
new vehicles or create posts.

Mukherjee said while there is no concern on the revenue
collection front, the subsidy bill of the government on crude
oil may go up if prices continue to remain high.

Besides, the government may also have to shell out more
to meet the subsidies on food and fertiliser.

"(So) I shall have to keep the target of the fiscal
deficit... but surely I am interested to have some austerity
measures to avoid the wasteful expenditures, but not
productive expenditure," he said.

The government proposes to keep the fiscal deficit at
4.6 per cent of the Gross Domestic Product (GDP) in 2011-12,
down from 4.7 per cent in the previous fiscal.

The government spends about Rs 73,637 crore a year on
fuel and fertiliser subsidies.

It is likely to spend about Rs 82,000 crore on food
subsidy this fiscal and the bill may go up to Rs 95,000 crore
once the National Food Security Act comes into play.

The government is expected to lose around Rs 36,000
crore during the current fiscal on account of duty cuts on
petroleum products.

On the other hand, the government may find it difficult
to mop up Rs 40,000 crore from sale of equity in the public
sector companies.

PTI



First Published: Tuesday, July 12, 2011 - 14:51

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