Finance Ministry has come out with certain measures to reduce fiscal deficit to 4.1 per cent of GDP which will be the lowest in last 7 years. It is nothing new because previously also Governments have been embarking on austerity measures to reduce fiscal deficit. The UPA Government, too, had resorted to austerity measures in the fiscal years 2012 and 2013. Whenever a Government feels it necessary for financial health of the country it does impose certain measures to restore the health. But, whatever measures have been imposed do not seem to be either harsh or forbidding.
According to the notification of the Finance Ministry, ban has been imposed on first class air travel by bureaucrats and also on holding meetings in five-star hotels. Purchase of cars and new appointments has been frozen. Vacancies that have remained unfilled for more than a year in the past will not be filled now. Explaining the rationale behind the austerity drive, the Finance Ministry note says that the objective is to rationalize expenditure and optimize resources. No new cars will be purchased and video conferencing is to be encouraged. Interest and debt payments, the defence budget, salaries and pensions will not be affected by these steps.
The Government has a number of mega developmental schemes in view which are meant to bring about unprecedented change in economic life of the people. But adequate capital is needed to carry forward the projects. Reducing fiscal deficit is important as GDP grows and Governments are duty bound to ensure fiscal health of the State. As a matter of fact, the role of civil society is very important in controlling inflation and ensuring control of fiscal deficit. The Finance Minister has made it clear that only those financial commitments that were made in the budget would be honoured and out of cuff commitments made have to be avoided. It has been the habit of public men to win cheap popularity by making thoughtless commitments in public rallies to win votes. When things come to practical delivery, there appears the big gap between what is needed and what is available.
It has also to be understood that there has been great pressure on the Government to undertake unforeseen expenditures owing to natural calamities as happened in Kashmir and Andhra Pradesh. Kashmir faced flood ravages and Andhra met with the cyclonic storm. Huge funds are needed to rebuild devastated infrastructure and provide succor to the affected people to rebuild their lives. The Union Government as well as the State Government is duty bound to provide succor to the suffering masses. According to the note, austerity measures would also apply to autonomous bodies, adding that no fresh commitments would be made over and above what was provided in the Budget.
With foreign investments dwindling and international fiscal position not promising much relief, India shall have to depend on her indigenous efforts to strengthen her economy. Austerity measures should not be left to the Government to decide when to be implemented and to what extent. Actually, the people themselves should develop the habit of reducing expenditures. This is our country and we have to fend for ourselves. Why should not all Indians have a norm of living austere life? In the land of Gandhiji, austerity has to be the culture and way of life because the Father of the Nation’s own life was a model of austerity without compromising the essentials. Is it not in fitness of things that instead of boasting of having had the great humanist like Gandhi ji we follow his precepts and the way of life he thought the people of this country should adopt?
One important aspect of austerity is avoiding waste and non productive expenditures. Unfortunately, a good portion of allocations made to various departments and heads gets wasted for lack of sensible planning and proper evaluation. Such wastes need to be avoided and the officers at the helm of affairs should be made responsible for wastes happening under their nose. Accountability has to be tightened and thus financial discipline has to be enforced.
For the current fiscal year, the Government has proposed a Plan expenditure of Rs 5.75 lakh crore, while that for non-Plan expenditure is over Rs 12.19 lakh crore.
Total budgeted expenditure estimates, including Plan and non-Plan stand at Rs 17,94,892 crore, higher than revised estimates for 2013-14 at Rs 15,90,434 crore.
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