Finance Ministry advices banks and other financial institutions to stop expenditure on festival gifts

The advisory comes at a time when the government is trying to boost consumption and encourage people to spend. In its effort to prop up spending by the middle class, the government has provided relief on the income tax front earlier this year in Budget 2025-26.

Ahead of Diwali, the Finance Ministry has issued advisory to all financial institutions, including the Reserve Bank of India, to stop wasteful expenditure like festival gifts in order to promote fiscal discipline and curb non-essential expenditure.

Citing an advisory from the Department of Public Enterprises, the Department of Financial Services (DFS) has asked entities under its administrative control to follow the directive, sources said.The advisory comes at a time when the government is trying to boost consumption and encourage people to spend. In its effort to prop up spending by the middle class, the government has provided relief on the income tax front earlier this year in Budget 2025-26.

Besides, the government has significantly reduced GST on about 375 items through the next-generation GST 2.0 reforms. The reduced rates have kicked in from September 22.The government estimates that impact of both tax rate cut and GST 2.0 would lead to Rs 2.2 lakh crore addition to India’s GDP which is touching USD 4 trillion.

These initiatives would also help mitigate the impact of a steep 50 per cent tariff imposed by the American Administration last month on shipments from India. The government is also celebrating GST Bachat Utsav across the country. It is noted that the government-run institutions are one of the biggest consumers and have a great influence in spurring demand especially during the festival. No expenditure shall be incurred on gifts and related items for Diwali and other festivals by Ministries and Departments and other organs of the Government of India, the DFS said, quoting an advisory issued by the Department of Public Enterprises.

The missive highlighted the need to promote fiscal prudence and responsible utilization of public resources. ”It has been noticed that there is a prevailing practice of incurring expenditure on gifts on the occasion of Diwali and other festivals in certain – Central Public Sector Enterprises (CPSEs),” an advisory by DPE dated September 19 had said. ”In the interest of economy and judicious utilization of public resources, it is imperative that such expenditure be discontinued. Accordingly, all the CPSEs are requested not to incur expenditure on gifts, etc. for any festival,” it had said.