File photo of Prime Minister Modi meeting bureaucrats
The Narendra Modi government continued its austerity drive on Thursday, this time banning first-class air travel by top bureaucrats to cut down on unnecessary expenditure and reduce the fiscal deficit.
The government also ordered ministries to reduce non-plan expenditure, barring them from making new financial commitments, purchasing new vehicles, creating new posts and holding conferences at five-star hotels.
Government expenditure is classified under two broad heads – plan and non-plan. Funds spent on creating assets through programmes and schemes come under plan expenditure, while non-plan expenditure refers to all spending, including establishment and maintenance activities of the government. These latest measures are aimed at cutting discretionary spending by 10% in the fiscal year to March 2015.
“In the context of the current fiscal situation, there is a need to continue to rationalise expenditure and optimise available resources,” said an order issued by expenditure secretary RN Watal that clamped down on secretaries flying first-class when travelling abroad. Last year’s austerity drive had advised them to avoid first-class travel, but several had reportedly ignored the suggestion.
Containing expenditure is crucial to keep the fiscal deficit within the budgeted 4.1 percent of GDP in 2014-15.
The move comes a month after Prime Minister Modi reportedly frowned at secretary-rank officers going on frequent foreign trips, saying they should travel only if sending a joint secretary or additional secretary-rank officer does not serve the purpose. Officers have also been asked to use video conferencing as much as possible.
However, the government did make a few changes to earlier versions of the austerity drive to avoid unnecessary inconvenience and paperwork. For instance, it exempted security forces from the ban on buying new vehicles.
In the past, security forces had to seek the finance ministry’s approval for every purchase. “This rule was a big impediment and slowed down our expansion,” said a Central Reserve Police Force (CRPF) officer.
The finance ministry also relaxed the rule forcing all bureaucrats except secretaries to travel by economy-class. This will now allow officers of the rank of joint secretary and above to travel business-class.
“However, there would no bookings in first-class,” Watal’s memorandum said.
The government will also not entertain proposals for participation in study tours or conferences overseas, except those that are fully funded by the sponsoring agencies.
In 2013-14 the fiscal deficit was a high 4.5 percent. By 2016-17, the finance ministry aims to bring this down to 3 percent.