No.7(1)/E.Coord.l2014
Government of India
Ministry of Finance Department of Expenditure
North Block, New Delhi, 29th October, 2014
OFFICE MEMORANDUM
Subject: Expenditure Management - Economy Measures and Rationalisation of Expenditure.
Ministry of Finance, Department of Expenditure has been '" issuing
austerity instructions from time to time with a view to containing
non-developmental expenditure and releasing of additional resources for
priority schemes. The last set of instructions was issued on is"
September 2013 after passing of the Union Budget. Such measures are
intended at promoting fiscal discipline, without restricting the
operational efficiency of the Government. In the context of the current
fiscal situation, there is a need to continue to rationalise expenditure
and optimize available resources. With this objective, the following
measures for fiscal prudence and economy will come into immediate
effect:-
2.1 Cut in Non-Plan expenditure:
For the year 2014-15, every Ministry / Department shall effect a
mandatory 10% cut in non-Plan expenditure excluding interest payment,
repayment of debt, Defence capital, salaries, pension and Finance
Commission grants to the States. No re-appropriation of funds to augment
the Non-Plan heads of expenditure on which cuts have been imposed shall
be allowed during the current fiscal year.
2.2 Seminars and Conferences:
(i) Utmost economy shall be observed in organizing conferences/
Seminars/workshops. Only such conferences, workshops, seminars, etc.
which are absolutely essential, should be held wherein also a 10% cut on
budgetary allocations (whether Plan or Non-Plan) shall be effected.
(ii) Holding of exhibitions/fairs/seminars/conferences abroad is
strongly discouraged except in the case of exhibitions for trade
promotion.
(iii) There will be a ban on holding of meetings and conferences at five
star hotels except in case of bilateral/multilateral official
engagements to be held at the level of Minister-in-Charge or
Administrative Secretary, with foreign Governments or international
bodies of which India is a Member. The Administrative Secretaries are
advised to exercise utmost discretion in holding such meetings in 5-Star
hotels keeping in mind the need to observe utmost economy in
expenditure.
2.3 Purchase of vehicles:
Purchase of new vehicles to meet the operational requirement of Defence
Forces, Central Paramilitary Forces & security related organizations
are permitted. Ban on purchase of other vehicles (including staff cars)
will continue except against condemnation.

2.4 Domestic and International Travel:
(i) Travel expenditure {both Domestic Travel Expenses (DTE) and Foreign
Travel Expenses(FTE)} should be regulated so as to ensure that each
Ministry remains within the allocated budget for the same after taking
into account the mandatory 10% cut under DTE/FTE (Plan as well as
Non-Plan). Re-appropriation! augmentation proposals on this account
would not be approved.
(ii)While officers are entitled to vanous classes of air travel
depending on seniority, utmost economy would need to be observed while
exercising the choice keeping the limitations of budget in mind.
However, there would be no bookings in First Class."
(iii) Facility of Video Conferencing may be used effectively. All extant
instructions on foreign travel may be scrupulously followed.
(iv) In all cases of air travel the lowest air fare tickets available
for entitled class are to be purchased! procured. No companion free
ticket on domestic/ international travel is to be availed of.
Creation of Posts
(i) There will be a ban on creation of Plan and Non-Plan posts.
(ii) Posts that have remained vacant for more than a year are not to be
revived except under very rare and unavoidable circumstances and after
seeking clearance of Department of Expenditure.
3. Observance of discipline in fiscal transfers to States, Public
Sector Undertakings and Autonomous Bodies at Central/ State/Local level:
3.1 Release of Grant-in-aid shall be strictly as per provisions
contained in GFRs and in Department of Expenditure's OM
No.7(1)/E.Coord/2012 dated 14.ll.2012.
3.2 Ministries/Departments shall not transfer funds under any Plan
schemes in relaxation of conditions attached to such transfers (such as
matching funding).
3.3 The State Governments are required to furnish monthly returns of
Plan expenditure - Central, Centrally Sponsored or State Plan - to
respective Ministries/Departments along with a report on amounts
ouistanding in their Public Account in respect of Central and Centrally
Sponsored Schemes. This requirement may be scrupulously enforced.
3.4 The Chief Controller of Accounts must ensure compliance with the above as part ofpre-payment scrutiny.
4. Balanced Pace of Expenditure:
4.1 As per extant instructions, not more than one-third (33%) of the
Budget Estimates may be spent in the last quarter of the financial year.
Besides, the stipulation that during the month of March the expenditure
should be limited to 15% of the Budget Estimates is reiterated. It may
be emphasized here that the restriction of 33% and 15% expenditure
ceiling is to be enforced both scheme-wise as well as for the Demands
for Grant as a whole, subject to RE ceilings. Ministries/ Departments
which are covered by the Monthly Expenditure Plan (MEP) may ensure that
the MEP is followed strictly.
The State Governments are required to furnish monthly returns of Plan
expenditure - Central, Centrally Sponsored or State Plan - to respective
Ministries/Departments along with a report on amounts ouistanding in
their Public Account in respect of Central and Centrally Sponsored
Schemes. This requirement may be scrupulously enforced.

4.2 It is also considered desirable that in the last month of the year
payments may be made- only for the goods and services actually procured
and for reimbursement of expenditure already incurred. Hence, no amount
should be released in advance (in the last month) with the exception of
the following:
(i) Advance payments to contractors under terms of duly executed
contracts so that Government would not renege on its legal or
contractual obligations.
(ii) Any loans or advances to Government servants etc. or private
individuals as a measure of relief and rehabilitation as per service
conditions or on compassionate grounds.
(iii) Any other exceptional case with the approval of the Financial
Advisor. However, a list of such cases may be sent by the FA to the
Department of Expenditure by so" April of the following year for
information.
4.3 Rush of expenditure on procurement should be avoided during the last
quarter of the fiscal year and in particular the last month of the year
so as to ensure that all procedures are complied with and there is no
infructuous or wasteful expenditure. FAs are advised to specially
monitor this aspect during their reviews.
5. No fresh financial commitments should be made on items which are not provided for in the budget approved by the Parliament.
6. These instructions would also be applicable to autonomous bodies funded by Government of India.

7. Compliance
Secretaries of the Ministries / Departments, being the Chief Accounting
Authorities as per Rule 64 of GFR, shall be fully charged with the
responsibility of ensuring compliance of the measures outlined above.
Financial Advisors shall assist the respective Departments in securing
compliance with these measures and also submit an overall report to the
Minister-in-Charge and to the Ministry of Finance on a quarterly basis
regarding various actions taken on these measures / guidelines.
(Ratan P.Watal)
Secretary(Expenditure)
All Secretaries to the Government of India
Copy to:
1. Cabinet Secretary
2. Principal Secretary to the Prime Minister 3. Secretary, Planning Commission
4. All the Financial Advisors
Source: www.finmin.nic.in
[http://finmin.nic.in/the_ministry/dept_expenditure/notification/emre/Austerityinstructions2014.pdf]
