Hard pressed to contain fiscal deficit, the Finance Ministry has directed that no fresh funds should be released to autonomous bodies or NGOs in the absence of utilization certificate of the money provided to them in the past.
"It has been decided that Grants-in-aid should not be released to any autonomous body or NGO or any other organization/institution (other than state governments) if it has not submitted all Utilization Certificates due to rendition," Finance Secretary R S Gujral said in an Office Memorandum.
He further said that this directive would come into force with immediate effect and has asked the secretaries of different ministries and departments to seek specific approvals for any deviation from the guidelines.
The expenditure compression directive will have implications for the agencies which receive grants-in-aid from central government ministries for implementing state-sponsored schemes, programmes and projects.
The directive follows the pre-budget consultations which the Finance Ministry had with other ministries and departments with regard to steps to ensure fiscal prudence and rationalization of expenditure.
In view of subdued revenue collection and rise in fuel and food subsidy bills, the Finance Ministry has already increased the fiscal deficit target for 2012-13 to 5.3% of the GDP (gross domestic product) from 5.1% estimated in the budget.
Finance Minister P Chidambaram had already indicated that steps would be taken to restrict the fiscal deficit, which is the difference between total receipts and expenditure, to 5.3%.