In Modi govt's new austerity drive, no front-end cabins, 5-star lunches for bureaucrats-Financial Express 30th Oct 2014
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.
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It is praise worthy that Mr. Naendra Modi Prime minister has issued guidelines to all offices to cut short spending on meeting, tours and travel, and on gifts. Bank officials in public sector banks will take lessons from directives issued by government on austerity and try to follow the same in banks too. It is well known that meeting of top officials, Branch Managers, Regional Heads or even Marketing Officers are conducted in 3 star or five star hotels and some times meetings are organised at tourist spot so that participants may enjoy the days of meeting lavishly without focussing on real agenda of the meeting.
There are examples when business plan meetings are organised at Lonawala or Kashmir or at Gangtok and lacs of rupees are spent on entertainment including drinking costly wine. It happens at all level, at Regional level meetings or Zonal or central office level meetings. Huge expenses thus incurred on such meetings but usually are shown as expenses on meeting details of which will never include expenses on wine or other enjoyments. Banks in general book erosion in profit or book loss but do not hesitate in spending lavishly in meetings and tours.
Officials travel from one place to other by plane and stay in five star hotels. Not only this , it is also true that if a top ranked officer of a bank has to attend wedding or birthday function of his relatives, he or she will arrange an official work and in record they are on official duty but in fact they are on personal visit. Such tours are managed even for travelling abroad. I am fully confident that now in view of changed culture of central government under the leadership of Narendra Modi , Bank management will also take required step to reduce avoidable expenses and take part in austerity drive launched by great Mr. Modi.
Now when technology is in advance stag , they can conduct all meting through video conferences or chatting arrangement through phones and mobiles. I hope , leaders of various trade union associated with bank staff will also take care of it and make efforts to reduce load of expenses on bank balance sheet .
Government Announces Measures for Fiscal Prudence and Economy; Every Ministry / Department to Effect A Mandatory 10% Cut in Non-Plan Expenditure; Utmost Economy to be Observed in Organizing Conferences/Seminars/Workshops; Ban on Purchase of Vehicles; in all Cases of Air Travel, the Lowest Air Fare Tickets Available for Entitled Class to be Purchased/Procured.
Ministry of Finance, Department of Expenditure has been issuing austerity instructions from time to time with a view to containing non-developmental expenditure and releasing of additional resources for priority schemes. The last set of instructions was issued on 18th September 2013 after passing of the Union Budget. 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 optimize available resources. With this objective, the following measures for fiscal prudence and economy will come into immediate effect:-
Cut in Non-Plan expenditure:
For the year 2014-15, every Ministry / Department shall effect a mandatory 10% cut in non-Plan expenditure excluding interest payment, repayment of debt, Defence capital, salaries, pension and Finance Commission grants to the States. No re-appropriation of funds to augment the Non-Plan heads of expenditure on which cuts have been imposed shall be allowed during the current fiscal year.
Seminars and Conferences:
(i) Utmost economy shall be observed in organizing conferences/Seminars/workshops. Only such conferences, workshops, seminars, etc. which are absolutely essential, should be held wherein also a 10% cut on budgetary allocations (whether Plan or Non-Plan) shall be effected.
(ii) Holding of exhibitions/fairs/seminars/conferences abroad is strongly discouraged except in the case of exhibitions for trade promotion.
(iii) There will be a ban on holding of meetings and conferences at five star hotels except in case of bilateral/multilateral official engagements to be held at the level of Minister-in-Charge or Administrative Secretary, with foreign Governments or international bodies of which India is a Member. The Administrative Secretaries are advised to exercise utmost discretion in holding such meetings in 5-Star hotels keeping in mind the need to observe utmost economy in expenditure.
Purchase of vehicles:
Purchase of new vehicles to meet the operational requirement of Defence Forces, Central Paramilitary Forces & security related organizations are permitted. Ban on purchase of other vehicles (including staff cars) will continue except against condemnation.
Domestic and International Travel:
(i) Travel expenditure {both Domestic Travel Expenses (DTE) and Foreign Travel Expenses(FTE)} should be regulated so as to ensure that each Ministry remains within the allocated budget for the same after taking into account the mandatory 10% cut under DTE/FTE (Plan as well as Non-Plan). Re-appropriation! augmentation proposals on this account would not be approved.
(ii) 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 be no bookings in “First Class."
(iii) Facility of Video Conferencing may be used effectively. All extant instructions on foreign travel may be scrupulously followed.
(iv) In all cases of air travel, the lowest air fare tickets available for entitled class are to be purchased/procured. No companion free ticket on domestic/ international travel is to be availed of.
Creation of Posts
(i) There will be a ban on creation of Plan and Non-Plan posts.
(ii) Posts that have remained vacant for more than a year are not to be revived except under very rare and unavoidable circumstances and after seeking clearance of Department of Expenditure.
Observance of discipline in fiscal transfers to States, Public Sector Undertakings and Autonomous Bodies at Central/State/Local level:
(i) Release of Grant-in-aid shall be strictly as per provisions contained in GFRs and in Department of Expenditure`s OM No.7(1)/E.Coord/2012 dated 14.ll.2012.
(ii) Ministries/Departments shall not transfer funds under any Plan schemes in relaxation of conditions attached to such transfers (such as matching funding).
(iii) The State Governments are required to furnish monthly returns of Plan expenditure - Central, Centrally Sponsored or State Plan – to respective Ministries/Departments along with a report on amounts outstanding in their Public Account in respect of Central and Centrally Sponsored Schemes. This requirement may be scrupulously enforced.
(iv) The Chief Controller of Accounts must ensure compliance with the above as part of pre-payment scrutiny.
Balanced Pace of Expenditure:
(a) As per extant instructions, not more than one-third (33%) of the Budget Estimates may be spent in the last quarter of the financial year. Besides, the stipulation that during the month of March the expenditure should be limited to 15% of the Budget Estimates is reiterated. It may be emphasized here that the restriction of 33% and 15% expenditure ceiling is to be enforced both scheme-wise as well as for the Demands for Grant as a whole, subject to RE ceilings. Ministries/ Departments which are covered by the Monthly Expenditure Plan (MEP) may ensure that the MEP is followed strictly.
(b) It is also considered desirable that in the last month of the year payments may be made- only for the goods and services actually procured and for reimbursement of expenditure already incurred. Hence, no amount should be released in advance (in the last month) with the exception of the following:
(i) Advance payments to contractors under terms of duly executed contracts so that Government would not renege on its legal or contractual obligations.
(ii) Any loans or advances to Government servants etc. or private individuals as a measure of relief and rehabilitation as per service conditions or on compassionate grounds.
(iii) Any other exceptional case with the approval of the Financial Advisor. However, a list of such cases may be sent by the FA to the Department of Expenditure by so" April of the following year for information.
(c) Rush of expenditure on procurement should be avoided during the last quarter of the fiscal year and in particular the last month of the year so as to ensure that all procedures are complied with and there is no infructuous or wasteful expenditure. FAs are advised to specially monitor this aspect during their reviews.
(d) No fresh financial commitments should be made on items which are not provided for in the budget approved by the Parliament.
(e) These instructions would also be applicable to autonomous bodies funded by Government of India.
Compliance
Secretaries of the Ministries/Departments, being the Chief Accounting Authorities as per Rule 64 of GFR, shall be fully charged with the responsibility of ensuring compliance of the measures outlined above. Financial Advisors shall assist the respective Departments in securing compliance with these measures and also submit an overall report to the Minister-in-Charge and to the Ministry of Finance on a quarterly basis regarding various actions taken on these measures /guidelines.
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