Agencies, New Delhi
Finance Minister P Chidambaram today asked government departments to stick to the Budget allocation amid indications that the government will initiate steps to put curbs on wasteful spending.
The Finance Ministry is expected to announce fresh austerity measures over the next two to three days, government officials said here. The move comes at a time when the Union government is grappling with the possibility of a higher oil subsidy bill in the wake of the rupee depreciation, which will upset its fiscal calculations.
In addition, tax receipts, especially on the direct tax front, have been hit by the extended economic slowdown, although the Ministry expects to make good some of the lost ground through a higher customs duty collection.
Weaker rupee has made imports more expensive, which means the government pockets more money from the import duties.
Yesterday, Mr Chidambaram met financial advisers of all government departments and asked them to stick to the Budget allocation so that the fiscal deficit target of 4.8 per cent of GDP is not breached.
Mr Chidambaram recently told financial advisers that no additional allocation would be made to any ministry, including defence and railways, which argued for more funds, the sources said.
‘’The red line should not be breached,’’ the Minister is learnt to have told the financial advisers and added that a department will have to earn an extra rupee if it has to spend a rupee more than what has been allocated.
At the meeting with Mr Chidambaram, the financial adviser of railways said the income of the ministry had been affected, while expenditure remained high and they may need additional resources
The sources said the financial adviser of defence ministry also expressed fear of breaching the allocation.
The Finance Minister asked them to cut their capital expenditure and make adjustments on the revenue front, and not expect any additional allocation.