It has asked, late last month, that all attempts be made to abolish vacant posts, that all non-salary expenses be reduced by ten per cent, and all seminars, conferences, workshops be postponed even if they have been provided for in the budget.

The Finance ministry note points out that with the fiscal deficit going up from Rs 36,325 crore in 1991-92 to Rs 86,345 crore in 1997-98, it was obvious that earlier austerity measures weren't really working. In the current year, based on the trends in the first six months alone, it is estimated that expenses are likely to go up by at least Rs 15,000 crore -- going by the manner in which the government is being forced to go back on most of its efforts to reduce subsidies, this looks all set to increase further. What makes things worse is the factthat annual tax collections have been very poor this year. Estimates from the ministry indicate that while direct tax collections have increased by 22 per cent, indirect taxes which comprise two-thirds of all taxes have fallen short by a whopping 14 per cent in the first six months of the year. The ministry has pointed out that despite the fact that the UF govt had said that PSUs had to increase the dividend paid to the government, this was not being adhered to in many cases. All Government departments and administrative ministries have now been asked to see to it that the directive is complied with completely.

PSUs have been asked to ensure that the dividend constitutes at least a fifth of post-tax profit for PSUs in the oil, petroleum, chemical and other infrastructure sectors, the minimum dividend is to be 30 per cent of post-tax profit. With the government's salary and wages bill shooting up because of the generous provisions of the Fifth pay commission and the largesse showed by the United Frontgovernment in granting sharp hikes even over this, the ministry has asked that all attempts be made to curtail any further increases. All attempts are to be made to abolish vacant posts at the lower end of the hierarchy to the maximum extent possible -- it will be recalled that this was one of the contentious provisions of the Fifth Pay Commission which was ultimately not implemented at all. Apart from sending the note to all secretaries, all heads of PSUs and all financial advisors, the note has also been sent to all chief secretaries of state governments asking them to consider sending similar instructions.