Cut ‘controllable’ spending by 20%: Finance Ministry tells ministries

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June 12, 2021 4:00 AM

“...all the ministries/ departments are requested to take steps to curtail all avoidable non-scheme expenditure and aim for 20% reduction in controllable expenditure, in compliance of the above decision. Expenditure in 2019-20 may be taken as the baseline for this purpose,” finance ministry said in an office memorandum dated June 10.

However, the exact savings from the latest move could not be immediately ascertained.However, the exact savings from the latest move could not be immediately ascertained.

The Union government has imposed curbs on certain regular but ‘controllable’ and ‘avoidable’ expenditure, in a move that will let it rein in overall budget spending as it undertakes fresh relief measures for people affected in the Covid-19 pandemic and speed up capex.

“…all the ministries/ departments are requested to take steps to curtail all avoidable non-scheme expenditure and aim for 20% reduction in controllable expenditure, in compliance of the above decision. Expenditure in 2019-20 may be taken as the baseline for this purpose,” finance ministry said in an office memorandum dated June 10.

A suggestive list of heads under which expenditure will be controlled include overtime allowance, rewards, domestic travel expenses, foreign travel expenses, office expenses, rents, rates and taxes, royalty, publications, other administrative expenses, supplies and materials, cost of ration, clothing and tentage, advertising and publicity, minor works and maintenance, service or commitment charges, grants-in-aid general, contribution and other charges.

However, the exact savings from the latest move could not be immediately ascertained.

According to the relief measures announced on Monday, the Centre will require to spend an additional Rs 1 lakh crore to distribute free food grains to 80 crore people under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) till November 4 (Diwali) this fiscal. While the total cost of the programme is estimated at Rs 1.25 lakh crore, some Rs 25,000 crore savings from the budget estimate of food subsidy in the year from clearance of a part of arrears meant to be cleared in the current fiscal, in March 2021 itself, would reduce the net outgo to nearly Rs 1 lakh crore, an official source said.

This apart, Monday’s announcement by the prime minister to take over vaccine procurement responsibility from state governments and provide the prophylactics free of cost to those to in the age group of 18-44 years will cost the exchequer an extra Rs 5,000-10,000 crore over the respective BE of Rs 35,000 crore, the source added.

After Covid-19 broke out in FY21, the government had imposed expenditure curbs up to 40% of the budget of many departments in April-November with an estimated savings of close to Rs 4 lakh crore. However, the stimulus measures to counter impact of the pandemic and clearance of food and fertiliser subsidy arrears ultimately enhanced budget spending by 15.4% to Rs 35.11 lakh crore from budget estimate level. The budget spending target is Rs 34.8 lakh crore for FY22. While the fiscal deficit shot up to 9.2% of GDP in FY21, budget target is to bring it down to 6.8% in FY22.

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