New Delhi. The Finance Ministry has issued an urgent order to all financial institutions to cut spending ahead of Diwali. The ministry has advised all public sector banks, including the RBI, to restrict unnecessary spending during the festive season, such as gift giving, to promote financial discipline and curb unnecessary expenditure.
Citing advice from the Department of Public Enterprises, the Department of Financial Services (DFS) has directed institutions under its administrative control to comply with this directive.
This advice comes at a time when the government is trying to boost consumption and encourage people to spend. In an effort to boost spending by the middle class, the government provided income tax relief in this year’s Budget 2025-26. The government has directly exempted income tax on income up to ₹12 lakh. Furthermore, the government has significantly reduced GST on approximately 375 items through the next-generation GST 2.0 reforms. These rates came into effect on September 22nd.
The government estimates that the impact of the tax cuts and GST 2.0 will add ₹2.2 lakh
crore to India’s GDP, pushing it past $4 trillion. This will also help mitigate the impact of the 50 percent tariff imposed by the US administration last month on shipments originating from India. The government is also celebrating GST Savings Festivals across the country. It has been observed that government institutions are among the largest consumers and play a key role in boosting demand during festivals.
What did the Department of Enterprises advise?
The DFS stated that no expenditure should be made by ministries, departments, and other institutions of the Government of India on gifts and related items for Diwali and other festivals. The message emphasized the need to promote fiscal prudence and responsible use of public resources. The department stated that it has been observed that some Central Public Sector Enterprises (CPSEs) have a practice of spending on gifts on the occasion of Diwali and other festivals. It is necessary to ban such practices to curb expenditure.
This directive applies to all festivals
Not just Diwali. The Department of Public Enterprises has stated that in the interest of the economy and the judicious use of public resources, it is essential to curb such expenditures. Therefore, government departments and companies are urged to curb unnecessary expenditures by discontinuing the practice of gifts on any festival, including Diwali.
