Opulence out, new austerity mantra in India

modi-gandhiNo first class air travel on overseas visits. No pow-wow in luxury hotels. Ostentation and opulence are out; austerity is in.

The new Indian government has tightened the belt and asked officials to cut down all the flab and frills, and get down to business. Unveiling an austerity drive, the Indian government underlined that it was aimed at cutting the non-plan expenditure by 10% and bring down the fiscal deficit to 4.1% of GDP in 2014-15.

The new guidelines enunciated by India’s finance ministry has barred bureaucrats from travelling first class on overseas visits and asked them to use video conferencing as much as possible. The accent is on doing away with needless frills, with officials barred from holding meetings in 5-star hotels.

The ministries and the government departments have also been asked to put a freeze on fresh appointments and filling up posts lying vacant for over one year.

“While officers are entitled to various classes of air travel depending on seniority, utmost economy would need to be observed while exercising the choice keeping the limitations of budget in mind. However, there would no bookings in the First Class,” said the office memorandum from the finance ministry.

The finance ministry also stipulated that the purchase of new vehicles to meet operational requirement of defence forces, paramilitary forces and security organisations are permitted but ban on purchase of any other vehicles would continue.

“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,” it said.

The austerity drive is underpinned by the government’s stated goal to lower the fiscal deficit to 3% of GDP by 2016-17. The deficit had soared to a high of 5.7% in 2011-12, but was brought down to 4.8% in 2012-13 and further to 4.5% in 2013-14 through a slew  of austerity measures.

“The task before me is very challenging because we need to revive growth, particularly in manufacturing sector and infrastructure,” finance minister Arun Jaitley had said in his budget speech. He added that choice has to be made whether or not to be victims of mere populism and wasteful expenditure.

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