It has asked all government departments to mandatorily reduce 10 per cent of their spend in: overtime allowance; domestic and foreign travel expenses; publications; professional services (consultancy, for instance); advertising and publicity; office expenses and other administrative expenses. All non-plan expenditure heads excluding interest payment, repayment of debt, defence capital, salaries, pensions and the finance commission grants to states will be subjected to a mandatory 5 per cent cut.

Highlighting that these measures are being taken keeping in mind “the tremendous pressure on government’s resources” on account of the “continuing rise in global crude oil and commodity prices” the finance ministry has asked ministries not to take up new schemes beyond those announced in the budget for 2008-09. The duty cuts announced on Wednesday are estimated to reduce the government’s revenues by Rs 22,660 crore this fiscal.

The ministry also said there would be 10 per cent cut in the budgetary allocation for seminars and conferences and that the practice of holding meetings and conferences at five star hotels would be discontinued. Stating that these measures were aimed at bringing in “fiscal discipline” among ministries, expenditure secretary Sushma Nath said the scope of the cuts covered government spending of around Rs 60,000 crore. The saving on account of these measures are expected to be around Rs 3,000 crore to Rs 6,000 crore. She also said that this drive would be subject to a monthly review by the secretary of the concerned department. Added to this, there would be quarterly review by the cabinet secretary on ministries “which may not be able to stick to targets”.

In the instructions sent out, the finance ministry said that “ministries and departments have also been advised to take advantage of the increasing competition in air travel schemes offering discounts to contain expenditure on air travel”. Further, advance payment to implementing/production agencies for any scheme/project/acquisition is to be limited to 10 per cent of the approved financial outlay this fiscal and that subsequent payments are to be related to deliverables/milestones.

Where and how much

10 per cent

Overtime allowance, domestic and foreign travel expenses, publications, professional services (consultancy, for instance), advertising and publicity, office expenses and other administrative expenses.

5 per cent

All non-plan expenditure heads excluding interest payment, repayment of debt, defence capital, salaries, pensions and the finance commission grants to states.