Press Information Bureau

Government of India

Ministry of Finance

23-November-2012 19:29 IST

Government has imposed economy measures like rationalization of expenditure and optimization of available resources with a view to improve macroeconomic environment. These include a ban on holding of meetings and conferences at five star hotels, restrictions on foreign travel and ban on creation of Plan and Non-Plan posts. Ministries/Departments have been advised that posts that have remained vacant for more than a year shall not be revived except under very rare and unavoidable circumstances and after seeking clearance of the Department of Expenditure.

Apart from the measures indicated above, the Government has taken the following steps to contain fiscal deficit:

i)  Government has reverted back to the path of fiscal consolidation with gradual exit from the expansionary measures in calibrated manner. The reduction in fiscal deficit from 5.9 per cent of GDP estimated in RE 2011-12 to 5.1 per cent of GDP in BE 2012-13 is designed with a mix of reduction in total expenditure as percentage of GDP and improvement in gross tax revenue as percentage of GDP.

ii) Government has also introduced “Medium-term Expenditure Framework Expenditure Statement”, setting forth a three-year rolling target for expenditure indicators with a view to undertaking a de-novo exercise for allocating resources for prioritized schemes and weeding out other that have outlived their utility. It would also encourage efficiencies in expenditure management.

iii) Government will also endeavour to contain the expenditure on Central subsidies.

iv) Government has also decided to adopt the following plan of fiscal consolidation during the period of the 12^th Plan i.e. from 2012-13 to 2016-17.

This was stated by the Minister of State for Finance, Shri Namo Narain Meena in a written reply to a question in the Lok Sabha today.

*****

DSM/RS/ka

Fiscal consolidation targets guide government austerity and a medium term expenditure framework to restrain deficit. Measures to contain the fiscal deficit combine administrative austerity-bans on meetings at premium hotels, travel restrictions, moratorium on creating posts and a restriction on reviving long vacant posts without clearance-with a medium term fiscal framework. The Government introduces a three year rolling Medium Term Expenditure Framework Expenditure Statement to set multi year expenditure targets, prioritize schemes, eliminate ineffective programmes, encourage efficiency, and contain central subsidies as part of a calibrated fiscal consolidation path.