In Modi govt's new austerity drive, no front-end cabins, 5-star lunches for bureaucrats

Written by ENS Economic Bureau | New Delhi | Updated: Oct 31 2014, 13:40pm hrs
AusterityThere will be no hosting of government conferences in five-star hotels except for bilateral meetings.
The Narendra Modi government has issued a set of austerity measures, including bans on first class air travel and hosting conferences in five star hotels, and a bar on reviving posts that have been vacant for more than a year, with the stated objective of cutting down non-plan spend by up to 10 per cent. The measures are in line with steps that were announced by the previous government.

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 optimise available resources, Ratan Watal, expenditure secretary, said in a missive.

With fiscal concerns on the forefront for the last few years, the finance ministry has been routinely issuing such guidelines, the last being in September 2013.

In 2014-15, the Centre has pegged its fiscal deficit at 4.1 per cent of the GDP. But it is facing an uphill task as it had already touched 75 per cent of the target in the first five months of the fiscal despite a significant cooling in global crude oil prices. While the finance ministry is set to begin pre-Budget consultations for 2015-16 from next week, it had also met financial advisers on Wednesday to take stock of spending by different ministries.

For the year 2014-15, every ministry/ department shall effect a mandatory 10 per cent cut in non-Plan expenditure, said the finance ministry listing out a number of steps for the purpose.

Non-plan expenditure consisting of payments including those on subsidies, interest and salaries is pegged at Rs 12.19 lakh crore this fiscal. However, government officials said that many of the guidelines are symbolic in nature and result in minimal savings.

While first class air travel has been barred, officials have also been advised to exercise economy in booking tickets and have been encouraged to use video-conferencing instead of making trips where ever possible. Officials would also not be permitted to get free companion tickets for domestic or international travel.

The missive has also advised against creation of new posts and has said that posts that have been vacant for more than a year should not be revived. Similarly, it has also barred purchase of new vehicles, adding that these would be allowed only to meet the operational requirement of defence and paramilitary forces.

Further, officials have also been told to avoid hosting conferences in five star hotels except ministerial bilateral and multi-lateral meetings. The finance ministry has also asked the departments to avoid bunching up expenditure in the last quarter to ensure that there is no wasteful spending.


* Travel only when necessary

* Use more video-conferencing

* No free companion tickets

* No purchase of new vehicles

* No creation of new posts

* No hosting conferences in five-star hotels except for bilateral meetings