New Delhi, Sept. 18: The Centre has banned government meetings in five-star hotels and air travel in business class by most officials as part of a now-familiar austerity regimen that hopes to save some money and send a larger message of pain-sharing action when the economy is not doing well.
“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,” the finance ministry said.
A memo asked officers, except top officers, to travel economy class on domestic flights and restrict foreign travel. (See chart on left)
The memo said that not more than one-third of the budget for any ministry should be spent in the last quarter and not more than 15 per cent of the budget in March, the last month of the financial year.
However, the government, which has committed to restricting its fiscal deficit — the gap between spending and earnings — to 4.8 per cent of the GDP, has already spent 63 per cent of its budgeted deficit by July-end this year.
Officials conceded that most of the measures announced were more for “atmospherics” and the real cut was in non-plan, non-recurring spending.
Non-plan spending minus the recurring payouts works out to some Rs 3.88 lakh crore. A 10 per cent cut, if it is enforced on the ground, will work out to a saving of Rs 39,000 crore.
Finance ministry officials said the segment where the government could really effect savings was subsidies but that may not be an easy job, given the rising trend in crude oil prices and the compulsions ahead of the approaching elections.
The finance ministry’s austerity note came on the heels of the rupee taking a severe beating over the past few months. The currency was hit by a high current account deficit and the possibility of capital outflows from India’s stock and debt markets.