PSU insurers placed under austerity curbs

The finance ministry has introduced a slew of austerity measures for the public sector general insurers. The measures include a 15 per cent cut certain spending, restrictions on foreign and domestic travels, conferences in five-star hotels, purchase of vehicles and creation of new posts. The ministry is expecting overall 20 per cent savings in each expenditure head in this fiscal, it is learnt.

According to a ministry official, the Department of Financial Services on Friday asked the chiefs of the six public sector general insurers—New India Assurance, United India Insurance, Oriental Insur-ance, National Insurance, General Insurance Corp-oration, Agriculture Insurance— to initiate suitable expenditure control measures.

"Due to the impact of Covid-19 pandemic, all the insurers are witnessing a decline in the topline growth, which is expected to affect the profitability of these companies. Therefore, the budgeted allocation for office expenses has been reduced up to 15 per cent through strict control of expenses."

"The insurers are expected to achieve overall savings of 20 per cent in each expenditure head of account, in accordance with the FY2020-21 key performance indicators (KPls)," a ministry note said.

Besides, curbing travel and expenses on office amenities, all celebratory events and conferences have been suspended. Vehicles can't be bought or leased and fuel spend has been cut by 20 per cent.

As per the note, the ban on fresh recruitments in any form whatsoever to all positions in the insurers, as imposed in 2017, shall continue. "No fresh financial commitments will be made on items which were not provided for in the budget," the note said, adding the LTA/LTC entitlements also stands suspended till further orders.

In order to curb an unwanted expenditure, similar measures were taken by the Modi 1.0 government when Arun Jaitley was the finance minister.